Fri, Aug 12, 2011 - Page 10 News List

France’s Societe Generale rebounds

RUMOR MILL:The Sarkozy administration refuted claims that France could lose its ‘AAA’ credit rating, with Fitch Ratings saying the outlook for the country was stable

AFP, PARIS

Trading in French bank Societe Generale, after being briefly suspended at the market opening yesterday, rebounded with the share price rising 8.9 percent to 24.16 euros.

On Wednesday, Societe Generale shares fell 14.74 percent on rumors, later denied as unfounded, that the bank faced problems because of its exposure to Greek debt.

Other banks, which also suffered badly on Wednesday, staged similar gains yesterday. Shares in BNP Paribas were up more than 1 percent, Credit Agricole 3 percent and Natixis 4 percent around 7:05am GMT.

The French stock exchange regulator, Autorite des Marches Financiers (AMF), said earlier that it would watch closely how bank shares fared yesterday.

“We will be watching over the sound functioning of the markets and in particular, the banking stocks which suffered badly [on Wednesday],” an AMF spokesman said.

Societe Generale said all the rumors swirling around the market about its financial health were completely unfounded and it demanded that the AMF investigate their origin, saying they had seriously damaged the interests of its shareholders.

The tumble came after Greece said that its exchange of bonds under its latest rescue might include instruments with a life stretching slightly beyond the target date of 2020 and that the swap procedures had not yet begun.

French banks and insurers have agreed to reschedule 15 billion euros’ worth of Greek debt as part of an EU rescue package to stabilize the eurozone.

Societe Generale announced last week its second-quarter net profit slumped 31 percent to 747 million euros (US$1.07 billion), largely because of its exposure to debt-stricken Greece.

Britain’s Mail on Sunday apologized for an article published on Sunday suggesting Societe Generale was on the “brink of disaster.”

“We now accept that this was not true and we unreservedly apologize to Societe Generale for any embarrassment caused,” the newspaper said in a statement.

The tumble of the bank’s share price also came as French President Nicolas Sarkozy broke off his summer vacation to meet with ministers to discuss France’s deficit-reduction plans amid the debt crisis rattling global markets.

The government categorically denied speculation that France might be the next major country to lose its top “AAA” status after the US lost the coveted credit rating last week. The Fitch ratings agency later confirmed that France was retaining its top triple-A credit rating and said the outlook was stable.

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