French banks are solid and can face any risk from their exposure to Greek sovereign debt, the head of the Bank of France, Christian Noyer, told a French newspaper today, adding that there was no secret plan in place to recapitalise them.
Mr Noyer, who is also a member of the European Central Bank's governing council, said that French banks were well capitalised and could withstand whatever scenario plays out concerning Greek debt with profits made in less than a fiscal half-year.
"They are very solid," he told Le Journal du Dimanche in an interview published today. "They have a solid capital base, comparable to other European banks and they are profitable ... None of them is hiding any toxic assets."
Mr Noyer was responding to a report in the same newspaper saying that French officials were working to establish a contingency plan to inject €10 to 15 billion into French banks in the event of them requiring recapitalisation.
A sharp drop in the share prices of French banks since the beginning of the summer has led to speculation that the French state may have to intervene and recapitalise them, in the same way that other governments were forced to help their lenders during the original global banking crisis.
Both BNP Paribas and Societe Generale have pledged to sell tens of billions of euros of assets to free up capital and a source in Qatar said last week that BNP Paribas was in talks with the Gulf state over a possible stake sale. The bank has categorically denied the existence of such talks.
Asked to comment on reports about a plan to recapitalise French banks, Mr Noyer said: "There is no plan, and we don't need one".
However, he added that if banks expressed the need for it, or in the case of an "extraordinary event", they could appeal to a public support mechanism created in 2008.
The French government set up a plan that year that made €360 billion available to banks, €40 billion of which would go toward strengthening their capital base and €320 billion of which would help them refinance via a public entity called the SFEF.
Le Journal du Dimanche, citing sources in French banks and close to the president's office, said that France had considered injecting public capital into banks, holding a secret meeting at France's Treasury with its director and the heads of French banks including Societe Generale, BNP Paribas and Credit Agricole.
The paper said the government offered to support banks in the same way as it had done in 2008, with the possibility of injecting €10 to 15 billion of public money to shore up their capital base.
The French Treasury had no immediate comment to make on the report.
Agencies