France won't use state funds to shore up banks: minister
The French government will not use state funds to assist banks in their efforts to build up capital after being hit by the eurozone debt crisis, Budget Minister Valerie Pecresse said Sunday.
"The state will not put money into French banks," Pecresse, who is also the government's spokeswoman, said in a joint interview with Europe 1 radio and i>TELE television.
"We think the banks' financing needs are not so great that they cannot face them on their own," she said.
"The French (banks) can recapitalise to the tune of about 7 billion euros with their own funds, their own profits," she said.
European banks are facing demands to boost their capital to restore stability and confidence in the markets as the eurozone crisis has raised concerns about their exposure to European sovereign debt.
France's major lenders are seen as overexposed to risky Greek, Spanish and Italian debt, and one, the Franco-Belgian specialist bank Dexia, has already been dismantled and partly nationalised.
The EU's banking regulator said Thursday that Europe's banks must raise an extra 114.7 billion euros ($152.5 billion) in new capital, while the Bank of France said the amount for French banks is around 7.3 billion euros.
Ratings agency Moody's on Friday downgraded the debt of leading French banks BNP Paribas, Societe Generale and Credit Agricole, warning of funding problems and the worsening economic environment.
The Moody's downgrade came shortly after rival ratings agency Standard & Poor's put a large number of European banks on review for a possible downgrade, including BNP Paribas, Societe Generale and Credit Agricole.
The French public has opposed state aid to the banks, with a poll of 1,028 people for newspaper L'Humanite in October showing 59 percent of respondents against the government contributing financial aid to help with bank recapitalisation.
Pecresse also raised concerns about a threat by S&P to downgrade France's cherished triple-A rating by two notches, saying it would complicate the country's finances but insisting Paris was capable of paying its debts.
"It would make things more complicated if it happens, it would not be positive, but it would not make us change course," she said.
She said a "historic" deal reached at an EU summit on Friday was the "first step" towards reassuring markets of France's fiscal health.
"France is a sure bet and no one doubts its ability to pay its debt," she said.
The pact, due to be finalised in March, includes plans to impose near-automatic sanctions on countries running excessive deficits and gives Brussels greater powers overseeing national budgets.
© 2011 AFP