Topgun1976
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BNP Paribas SA and Societe Generale SA, France’s biggest banks by market value, rose in Paris trading on speculation the French government will take steps to bolster their capital. BNP Paribas jumped 2.26 euros, or 9.8 percent, to 25.32 euros in Paris trading. Societe Generale gained 8.8 percent to 16.65 euros and Credit Agricole SA, the country’s third-largest lender, gained 4.8 percent to 4.43 euros. All three banks slumped more than 50 percent in the past three months as Europe’s sovereign debt crisis intensified.
“Increasingly nervous wholesale funding and equity markets may trigger short-term French government action to support its banks,” Royal Bank of Scotland Group Plc analysts Jorge Mayo and Stefan Stalmann wrote in a note today. “The French government would be more likely to resort once more to loss- absorbing instruments other than common equity.”
The capital injections would amount to 16 billion euros ($21.6 billion) for BNP Paribas, 4 billion euros for Societe Generale and 14 billion euros for Credit Agricole, according to the RBS note.
This level of recapitalization for the three banks would represent about 2 percent of France’s gross domestic product, the RBS analysts said. “Its debt/GDP would rise from 87 percent to about 89 percent, which looks broadly manageable and may avoid a rating downgrade,” they wrote.
Measures the banks have already announced to shrink their balance sheets “would allow for repayment of government capital out of internally freed-up capital, and any issuance of common equity could be executed in a much less stressed market place at higher prices,” the RBS analysts said.
A Paris-based spokeswoman at BNP Paribas SA declined to comment when reached by phone, as did spokeswomen at Societe Generale and at Credit Agricole.
--Editor: Frank Connelly,
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at [email protected].
To contact the editor responsible for this story: Frank Connelly at [email protected]
“Increasingly nervous wholesale funding and equity markets may trigger short-term French government action to support its banks,” Royal Bank of Scotland Group Plc analysts Jorge Mayo and Stefan Stalmann wrote in a note today. “The French government would be more likely to resort once more to loss- absorbing instruments other than common equity.”
The capital injections would amount to 16 billion euros ($21.6 billion) for BNP Paribas, 4 billion euros for Societe Generale and 14 billion euros for Credit Agricole, according to the RBS note.
This level of recapitalization for the three banks would represent about 2 percent of France’s gross domestic product, the RBS analysts said. “Its debt/GDP would rise from 87 percent to about 89 percent, which looks broadly manageable and may avoid a rating downgrade,” they wrote.
Measures the banks have already announced to shrink their balance sheets “would allow for repayment of government capital out of internally freed-up capital, and any issuance of common equity could be executed in a much less stressed market place at higher prices,” the RBS analysts said.
A Paris-based spokeswoman at BNP Paribas SA declined to comment when reached by phone, as did spokeswomen at Societe Generale and at Credit Agricole.
--Editor: Frank Connelly,
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at [email protected].
To contact the editor responsible for this story: Frank Connelly at [email protected]
