BNP chairman says French banks 'holding up well'

PARIS: BNP Paribas does not need any financial support and has no knowledge of any move by German engineering group Siemens to withdraw deposits from a large French bank, the bank's chairman said in a radio interview on Tuesday.

Chairman Michel Pebereau insisted that his and other French banks have no need for new capital even though their shares have been hammered in recent weeks over concern about their financial strength and access to funding.

"We have no need at the moment for any recapitalisation," told RTL. "The banks are holding up well ... We don't need any type of aid today."

When asked whether Siemens had withdrawn deposits from a large French bank two weeks ago and transferred them to the European Central Bank -- as reported by the Financial Times report on Tuesday -- he replied: "In any case, I don't know anything about this".

The newspaper said it was not clear from which bank Siemens had withdrawn the deposits. However, it quoted a person familiar with BNP Paribas as saying that it was not the bank involved.

Societe Generale shares were down 3 percent in early trading, while BNP Paribas shares were 1.7 percent lower.

Separately, the chief executive of French carmaker PSA Peugeot Citroen said he was confident that French banks were a safe place for the company's cash.

"We have placed our funds in the big banks and I have no particular concerns," Philippe Varin said on French radio BFM.

BNP Paribas, the largest of France's embattled banks, plans to sell 70 billion euros ($95.3 billion) of assets to shore up capital and cut funding needs, and perhaps stay the credit rating cut suffered by its main rivals.

Earlier this month Moody's downgraded the credit rating of Societe General and Credit Agricole. It kept BNP Paribas's long-term Aa2 ratings under review while assessing the potential impact of funding difficulties on the bank's credit profile.

"We are in a situation where, due to difficulties that states have with their debt, there is a direct impact on all French banks but the banks are holding up well," Pebereau said.

Italy, the euro zone's third largest economy, has been dragged to the centre of the debt crisis over the past three months as concern has grown over a debt burden equal to some 120 percent of its gross domestic product.

Standard and Poor's cut its unsolicited ratings on Italy by one notch, warning of a deteriorating growth outlook and damaging political uncertainty, in a move that took markets by surprise and added to pressure on the debt-stressed euro zone.

BNP Paribas, along with Credit Agricole, are most exposed to Italy but Perebeau expressed confidence the Italian government would adequately deal with the crisis.

"Italy will of course deal with its debt," Perebeau said.

Copyright Reuters, 2011