French bank seeks to settle finance fears

Some of France’s largest banks and insurers tried to reassure customers and investors today after talks on the financial crisis with President Nicolas Sarkozy.

They that the French banking system can weather the storm.

The meeting came as Belgium, Luxembourg and France decided to inject almost €6.4bn in Belgian-French bank Dexia to keep it afloat, after its shares closed nearly 30% lower yesterday.

France’s finance minister insisted that she was not worried about the country’s banks – even after staying up all night to help arrange the Dexia rescue plan.

Christine Lagarde said:“I want to make sure that French banks are able to do their business in the best conditions to support the financing of the economy.”

The head of insurance giant Axa agreed. “The French financial system is a stable one with a very comfortable solvency, and I believe that in tense moments like this, no one should panic,” Henri de Castries said.

“There is a pilot, there are pilots in the aeroplane, the appropriate measures have been taken,” he said, pointing to the Dexia deal.

Mr Sarkozy had called the meeting with the leaders of France’s largest banks and insurers to review the state of the French financial system and of consumer and business lending.

The meeting came after other European governments had to intervene to help Belgian-Dutch Fortis on Sunday, and Britain’s Bradford & Bingley and Germany’s Hypo Real Estate Holdings AG yesterday.

Mr Sarkozy’s office said the government will announce “new measures” related to the French financial sector by the end of the week.

The head of the French banking federation also left the meeting at the presidential palace with a positive message.

“The French system is solid, diversified and benefits from the support of the public authorities,” said Jean-Claude Pauget, who is also chief executive of French bank Credit Agricole.

Bank of France Governor Christian Noyer, who also participated, said in a radio interview before the meeting that “we are having difficulties, but we must have total confidence in the safety of the French banking system. In these circumstances we must keep a cool head and reason objectively. We must stop collectively frightening ourselves.”

France’s banks “have been touched by the crisis on financial markets ... but (French banks) are not overloaded with bad assets like a certain number of American banks were.”

“Fundamentally, they are solid.”