France Resets The Rumormill: "No Plan To Recapitalize Banks" ... Until Tomorrow
It's just getting plain idiotic in France and Europe. After last week the global stock market soared (then crashed) on two separate micro-occasions (since everything is now measured in HFT time) following rumors first from the FT then from someone we don't even remember who, that French banks would be recapitalized, here comes the strawman reset for the next 24hours. From Reuters: "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, adding that there was no secret plan in place to recapitalise them." Well, no, they are not. Just ask the Chinese. Or Siemens. But at least this latest refutation gives France hope that when BNP, SocGen and CA are all down 15%, leaking this same rumor for the third time, may provide a short-term temporary boost. Alas, not even the vacuum-tube controlled market is that dumb.
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 (JDD) in an interview published on Sunday. "They have a solid capital base, comparable to other European banks and they are profitable ... None of them is hiding any toxic assets."
Noyer was responding to a report in the JDD saying that French officials were working to establish a contingency plan to inject 10 to 15 billion euros 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, Noyer said: "There is no plan, and we don't need one".
And here is the loophole left for 24 hours from now, when Europe is about to close again (and one of these times, if the Eurocrats continue with this idiocy, permanently).
Noyer 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 euros 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.
Well, that's just great work there Noyer. This time next week we will have fact, not rumor, that France has been forced to inject (thanks to evil, nasty speculators) E360 billion into its financial sector, now that the market and the bond vigilantes know that it can push France that much more without committing M.A.D.