French banks rebound amid cash-injection hopes
The French stock market rose by 3.14 per cent on Monday over press reports of a plan to recapitalise the country's ailing banks. French banks carry large amounts of risky Greek and Italian debt and their share prices have swung wildly in recent weeks.
BNP Paribas lost 3.99 per cent on opening but then jumped 8.04 per cent in afternoon trading. Credit Agricole and Société Générale also dipped before gaining 6.73 per cent and 8.32 per cent respectively.
The CAC 40 index fell by 1.97 per cent in initial trading but then rallied 3.14 per cent to 2,898.30 points.
Traders were initially concerned about a range of negative indicators and were in suspense ahead of Thursday's vote in the German parliament on whether to allow an expansion of Europe's bail-out fund.
But they regained confidence amid news that France had begun to look at options to recapitalise its vulnerable banks in mid-September.
According to the Sunday newspaper the Journal du Dimanche, France is planning a 10-15 billion euro recapitalisation plan for five top banks struggling with the eurozone debt crisis.
The paper said the state had made the offer during a 11 September meeting with officials from five banks, BNP Paribas, Société Générale, Crédit Agricole, BPCE and Crédit Mutuel. The plan was rejected by Société Générale.
The finance ministry has admitted the government held talks with the banks, but denied the bailout offer.
Meanwhile, the Franco-Belgian investment bank Dexia, which narrowly escaped collapse in the 2008 global financial crisis, needs to dispose of another 20 billion euros worth of bad debt.
According to the financial newspaper Les Echos, after a previous sale of some 80 billion euros of toxic loans, the investment bank now plans to offload another 20 billion
Press reports over the weekend also suggested Dexia could be looking at a tie-up with French state controlled banks.
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