French government to loan EUR 10 bn to banks

23rd October 2008, Comments 0 comments

The government grants emergency loans to help seven struggling French banks endure the global credit crunch.

23 October 2008
PARIS - The French government's financial arm will grant an emergency loan of up to EUR 10 billion to the country's banks to help them endure the global financial crisis, newspapers reported Thursday.
The Deposits and Consignation Fund (CDC) will make a first loan of EUR 5 billion to a refinancing company formed to support French banks, the financial dailies Les Echos and La Tribune reported without citing any sources.
The CDC would be reimbursed through stocks from the refinancing company.
A second EUR 5 billion loan will be made available on 31 October if the banks still have a pressing need for cash, La Tribune reported. The loan would be repaid by 31 December.
Seven banks -- BNP Paribas, Banque Populaire, Caisses d'Epargne, Credit Agricole, Credit Mutuel, HSBC and Societe Generale -- will be eligible for the loan.
The Economy Refinancing Company was created to borrow money through bonds, with state guarantee, and in turn loan that money at a higher rate to banks lacking financing.
The government announced on Monday it would make EUR 10.5 billion available to leading banks to boost economic activity in the global credit squeeze.
Lawmakers earlier in October approved a EUR 360 billion overall package to support French banks. Several European countries also agreed to inject money into the hardest-hit banks and fund loans between financial players.
[AFP / Expatica]

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