BNP, Societe Generale Say French Report They May Raise Capital Is False Q

By Francois de Beaupuy - Oct 9, 2011 11:00 PM GMT+0900

BNP Paribas (BNP) SA, France’s largest bank, and Societe Generale SA denied a report in today’s Le Journal du Dimanche that they may seek to raise billions of euros to shore up their capital as part of a Europe-wide plan.

“BNP Paribas is denying this report, and is confirming that it plans to reach a Tier 1 capital ratio of 9 percent,” complying with Basel III rules “by the start of 2013, six years before the deadline, without a capital increase,” spokeswoman Carine Lauru said in a telephone interview today.

Societe Generale also “denies the report” and confirmed its strategic plan to reach a Tier 1 ratio of “well above 9 percent by the end of 2013 without a capital increase,” Laetitia Maurel, a spokeswoman for the Paris-based bank, said in an email statement.

Le Journal du Dimanche today reported that BNP Paribas and Societe Generale (GLE) may seek to raise 7 billion euros ($9.4 billion) and up to 4 billion euros respectively as part of a Europe-wide plan to be discussed between France and Germany to shore up the region’s banking system. The French newspaper didn’t say where it obtained the information.

Paris-based BNP Paribas and Societe Generale, France’s second-largest bank, said last month they were taking steps to assuage investors’ fears and reduce their need for U.S. dollar funding.

Balance Sheet Cuts

BNP Paribas is planning to reach a Tier 1 capital ratio, a measure of financial strength, of 9 percent by the start of 2013 through measures including cutting its corporate- and investment-banking balance sheet by $82 billion, according to a Sept. 14 presentation.

German Chancellor Angela Merkel and French President Nicolas Sarkozy, who are meeting today, will set a timeframe to reach equity goals in coming weeks because a signal must be given to reassure markets, Le Journal du Dimanche said, citing an unidentified person close to Sarkozy.

Banks will have to seek funds from private investors, according to the newspaper. If they fail to find private investors, governments or the European Union will take stakes in banks, it said.