France backs Brussels' on bank recapitalisation
France supports the European Commission's proposal that banks should build up their level of core tier one capital to nine percent of assets, Finance Minister Francois Baroin said Friday.
"The position of the Commission and Mr Barroso two days ago is acceptable. A nine percent capital level between now and the end of the first half of next year is good," Baroin said on Europe 1 radio.
European Commission chairman Manuel Barroso made the suggestion as finance ministers from the G20 powers prepared to meet Friday in Paris to plan a way out of the financial crisis undermining world economies.
Baroin said a nine percent level, which some banks have argued is too high and would cut growth, "would help absorb the shock" of the eurozone sovereign debt crisis, which has undermined faith in European institutions.
The French minister said banks, starting with those who failed or scraped through stress tests earlier this year, should build up core capital through paying lower dividends to shareholders and lower bonuses to traders.
"They should not do this to the detriment of economic activity or loans to individuals and businesses," he warned.
"If they can't do this themselves they should look to the markets, if the markets aren't enough they should seek partners and in the last resort there's the possibility of European coordination" on using public funds, he said.
© 2011 AFP