French banks are hardly alone in Europe in having suffered steep share price falls since the start of this year. But the apparent inability of European policymakers to control the sovereign debt crisis is making investors increasingly fearful that some of France’s best-known banks may be sucked into the centre of the storm.
Wednesday’s decision by Moody’s, the credit rating agency, to downgrade Société Générale and Crédit Agricole and to put BNP Paribas on review was driven by concern about their exposure to Greek debt. But it also reflected nervousness about how a sudden intensification of the debt crisis might affect the ability of France’s three biggest banks to fund themselves on capital markets.
By the standards of their European peers, French banks have a high exposure to Greek public and private debt. Société Générale and Crédit Agricole both own Greek bank subsidiaries. True, there are no liquidity or solvency threats requiring immediate action to shore up France’s banking system, as there were in 2008. In any case, the European Central Bank has promised to provide as much liquidity as eurozone banks need.