FRANKFURT (MNI) – In a further sign of the stress facing certain
banks in accessing dollar funding, the ECB announced that two banks had
tapped a total of $575 million from its seven-day dollar
liquidity-providing operation on Wednesday.
The last time banks tapped the ECB’s dollar operation was back in
mid-August, when one institution drew $500 million.
The seven-day operation comes as Moody’s announced that it had
downgraded its credit rating for the French banks Credit Agricole and
Societe Generale. This follows intense speculation that a default by
Greece could threaten the survival of some French institutions with
large exposure to Greek debt.
This morning, Bank of France Governor Christian Noyer denied that
French banks were under-capitalized, insisting that they would be able
to withstand losses arising from a Greek default.
BNP Paribas on Tuesday asked France’s market watchdog agency to
investigate what it called “false news” about its dollar liquidity
position contained in an opinion piece published by the Wall Street
Journal. The Journal quoted an unidentified BNP executive saying the
bank could “no longer borrow dollars.”
French bank shares have been among the worst performers in Europe
over the past week as renewed concerns over the Eurozone debt crisis
have intensified. Societe Generale’s share price is off over 70% so far
this year, while BNP Paribas down 55%.
–Frankfurt Bureau, +49 69 720 142; email: frankfurt@marketnews.com–
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