France ‘not to put capital in banks’

France ‘not to put capital in banks’

PARIS - Reuters
France ‘not to put capital in banks’

Fitch, the credit rating agency, put a negative outlook on France’s perfect triple A rating. AFP photo

Credit ratings agency Fitch does not expect France’s government to have to provide capital to bolster its banking system, its head of sovereign ratings said yesterday.

Fitch put France’s AAA credit rating on negative outlook last month and said that it was the triple A country the most exposed to a deterioration of the eurozone’s debt crisis.

French banks’ holdings of debt from troubled states and reliance on wholesale funding left them exposed as the crisis worsened last year, making them increasingly dependent on liquidity from the European Central Bank (ECB).

While the banks’ troubles had put some pressure on the French state, Fitch’s managing director for sovereign ratings, David Riley, said that it would probably not have to recapitalize them although the risk was not totally non-existant.

“It’s not our expectation that the French government will need to support to French banks,” Riley said in Paris.

The ratings agency told Reuters on Tuesday that it did not expect to downgrade France this year given the country’s current economic and fiscal fundamentals unless the eurozone crisis worsened significantly.

Meanwhile, shares in Italian bank UniCredit rose on the fourth day since the launch of the bank’s 7.5 billion euro ($9.5 billion) rights issue after a report that a Kazakhstan sovereign fund had built a 5 percent stake in the lender.

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