Noyer says French banks could use 2008 support mechanism
PARIS (Reuters) - France could use a support mechanism set up at the height of the banking crisis in 2008 to shore up the capital bases of French banks in case of an "extraordinary event," Christian Noyer, head of the Bank of France, told a French newspaper.
Noyer, also a member of the European Central Bank's governing council, told Le Journal du Dimanche (JDD) that French banks did not need to be recapitalized but could seek support from a public entity if they deemed it necessary.
Asked to comment on a report in the same newspaper, which alleged that France's government had discussed a plan to inject 10 to 15 billion euros into the French banking system, he said: "There is no plan, and we don't need one."
"They (the banks) are very solid. They have a solid capital base, comparable to other European banks and they are profitable ... None of them is hiding any toxic assets."
He added, however, that banks could appeal to a public entity set up in 2008 under a broader plan to support the French banking sector soon after the collapse of U.S. investment bank Lehman Brothers.
"The only thing that exists is the mechanism from 2008 ... If there was an extraordinary event, this mechanism is in place," he said.
At the time the French state had made 360 billion euros available to banks, 40 billion of which was for strengthening their capital base and 320 billion of which would help them refinance via a public entity called the SFEF (Company for Financing the French Economy).
France's finance ministry said it "categorically denied" any suggestion that France was planning to activate public support for the banking sector.
Noyer's comments follow a sharp drop in the share prices of French banks that fed speculation that the French state may have to intervene and recapitalize them, in the same way that other governments were forced to help their lenders during the original global banking crisis. Continued...