Monday, October 17, 2011

Der Spiegel warning on French Banking dangers

The Der Spiegel article is linked here. BNP Paribas, one of the larger (and reportedly most at risk French banks) had its credit rating down-graded last Friday. The Bloomberg report on that decision, linked here, includes the following startling statement on the outlook for French banks as seen across the Atlantic:

The eight largest U.S. money-market funds reduced their lending to French banks by 44 percent last month as the European sovereign debt crisis worsened. Holdings in BNP Paribas, Societe Generale, Natixis SA and Credit Agricole dropped to $23.2 billion at the end of September from $41.5 billion the previous month, according to filings compiled by Bloomberg and published in today’s BloombergRisk newsletter.

“Funding market dislocations and negative market sentiment have revealed that the funding and liquidity profiles of the five banks are more vulnerable than we had thought,” S&P said in the statement. “The moderate current capital position of BNP Paribas, BPCE, Groupe Credit Agricole and Societe Generale is a ratings weakness,” S&P said.

One must wonder how much of the suggested 3 trillion now meeded to support the Ero can be underwritten by the French sovereign state. It seems small surprise that all in Germany seem to be backpeddling as fast as possible from the reports that a solution will be forthcoming next Sunday, let alone by 3rd November in Cannes, scene for many other fantasies, albeit usually only on celluloid!

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