Deteriorating confidence in French banks’ ability to withstand the euro zone debt crisis has hit their share prices hard and ramped up their cost of US dollar funding, but Prot insisted in a radio interview the bank was operating normally.
Shares in BNP were down 5 percent at 23.23 euros at 1123 GMT, in line with banking stocks across Europe, pummelled by darkening clouds on the economic horizon. French rivals Societe Generale and Credit Agricole were down 7.4 percent and 7.7 percent, while Britain’s Barclays was down 6.3 percent, and Spain’s Santander down 5 percent.
A Qatar-based source told Reuters late on Wednesday that the resource-rich emirate had talked to BNP and banks across France over taking a possible stake, given their “tremendous need” for capital.
Meanwhile, a report in the Financial Times said BNP executives were to tour Abu Dhabi as well as Qatar in a bid to raise fresh capital.
“I formally deny this,” Prot told BFM Radio when he was asked about the reports. “We have no particular contact because we don’t need a capital increase.”
Prot said any contact with Qatar’s sovereign wealth fund consisted of a “routine visit, nothing more.”
A BNP spokeswoman earlier also denied as “pure fantasy” a report in the FT saying BNP had asked for “emergency stress tests” to pinpoint weaknesses in France’s banking system.
Fears are spreading beyond the solvency and liquidity position of French and European banks to the health of the broader economy. A grim outlook for the US from the Federal Reserve and signs of a slowing in China and Germany sent world stocks tumbling and drove investors into safer currencies and government bonds.
“It’s all a question of confidence,” said Francois Chaulet, fund manager at Montsegur Finance in Paris. “What could restore confidence? A real solution for Europe.”
Elsewhere on Thursday, Deutsche Bank Chief Executive Josef Ackermann said the single-currency bloc was under stress from the sovereign debt crisis, though he insisted the euro was sound.
Chaulet said that even a potential investment from Qatar of around 2 billion euros would be “worthless” in the face of a deterioration of the euro debt crisis and said market valuations of euro sovereign debt implied potentially “colossal” losses for the banks if they were fully marked.
BNP, which has already taken a 21 percent haircut on part of its 4 billion-euro ($5.5 billion) Greek debt portfolio, would be able to absorb further potential writedowns, Prot told BFM Radio. But he ruled out marking down the bank’s 20.8 billion-euro Italian portfolio, saying there was no need.
Acknowledging there were worries in the market, Prot nonetheless insisted French banks were not in peril and threw the ball back into the euro zone policymakers’ court.
“What is important is to put into place rapidly what was decided on July 21 ... and for the EU to take all necessary measures to strengthen the credibility of the euro zone,” he said, referring to a July eurozone agreement to allow the 440 billion-euro European stability facility to buy sovereign bonds to prop up struggling states.
Commenting on the possibility of the French state intervening in its banking system, Prot said this was “not in (BNP’s) plans.”
A Mideast investment in French banks would have echoes of the peak of the financial crisis in 2008, when Qatar and Abu Dhabi bought stakes in Barclays as part of a capital increase that helped the lender stay independent while rivals Royal Bank of Scotland and Lloyds ended up part-nationalized.
But today’s crisis is not so easily resolved, one bank analyst said.
“If Qatar had been the way out of the slump, the stock would have reacted positively,” he said. “The fact is that if the Italian situation gets worse, a couple billion euros won’t help.”
