France wants EU to cooperate on bank recapitalisation

7th October 2011, Comments 0 comments

France urged European governments Friday to work together on a plan to recapitalise banks left vulnerable by the sovereign debt crisis and denied any rift with Germany over the issue.

The finance ministry admitted that some French banks were in need of finance but said EU member states should coordinate their response and draw up a common timetable for recapitalisation.

"It is essential that there be coordination at a European level to determine three things -- the amount of capital needed, the timetable under which this level of capital be achieved and the tools to do that," the ministry said.

A finance ministry official insisted that France and Germany see eye to eye on the need for new private sources of capital to be tapped first before state funding would come into play.

There have been reports that Paris is keener on using public funds than is Berlin but the official said this would be a "last resort."

He added: "There are several options in terms of public finance but we have not yet discussed this at a European level."

France's major lenders are seen as overexposed to risky Greek, Spanish and Italian debt and one, the Franco-Belgian specialist bank Dexia is on the brink of being broken up and part nationalised.

French President Nicolas Sarkozy is to meet Germany's Chancellor Angela Merkel on Sunday to discuss the parameters of a plan to aid European banks.

© 2011 AFP

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