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French government denies major bank in turmoil

Latest update : 2008-10-02

France's employment minister has played down rumours that one of the country's major saving banks, the Caisse d'Epargne, was facing serious economic difficulties and seeking a 6.5-billion-euro bailout.

The French government sought to quash rumours on Wednesday that one of the country's major savings banks was dangerously exposed in the credit crisis and repeated a promise to protect the sector.
The Caisse d'Epargne firmly denied that it was in difficulty after the satirical weekly Canard Enchaine reported it needed a 6.5-billion-euro (9.2-billion-dollar) cash injection in order to cover its debts.
Employment Minister Laurent Wauquiez also came to the bank's defence.
"In terms of financial crisis, we are in a situation where any rumour is possible, and these kinds of rumours are completely destructive," Wauquiez said in an interview with Canal+ television when asked about Caisse d'Epargne.
"It's very easy to say that such-and-such an institution has problems. We're going through a very difficult period, so obviously all institutions could be threatened," he explained.
"The most important point is that the best guarantee for the French is that no saver will suffer because if any French institution has problems the state will step in," he said, repeating a government vow to protect depositors.
The Caisse d'Epargne bank is popular with individual French customers and usually regarded as a safe home for family savings and retirement nest eggs.
But the bank has an interest in two subsidiaries, property group Nexity and investment bank Natixis, which have come under the spotlight since the storm created by the US credit crunch spread to European financial markets.
On Wednesday the French financial regulator AMF opened an inquiry into trading in Natixis shares, which have plummeted by more than 70 percent since the start of the year, amid allegations of illegal trades.
In the first half of 2008, the Caisse d'Epargne net profits fell by 98.5 percent to only 21 million euros.

Date created : 2008-10-01