France begins implementation of bank bail-out
After last-minute adjustments to secure EU approval, France on Thursday began implementing its bank bail-out plan, reported dpa.
Under the plan, the state will subscribe to subordinated five-year debt totalling 10.5 billion euros (13.75 billion dollars) issued by the country's six largest banks.
The debt subscription concerns the banks Credit Agricole (3 billion euros), BNP Paribas (2.55 billion), Societe Generale (1.7 billion), Credit Mutuel (1.2 billion), Caisses d'Epargne (1.1 billion and Banques Populaires (0.95 billion), the French Finance Ministry said.
In exchange, the French banks have committed themselves to increasing their loans to individuals and companies by 3 to 4 per cent by the end of 2009.
Before the European Commission approved the plan on Monday, it warned that the initial proposal did not have sufficient safeguards to make sure that the state intervention was limited and would not give the banks an unfair competitive advantage.
The French government then rewrote the scheme to meet those concerns, adding guarantees to limit the extent of its involvement and to make sure that the money would be used to stimulate the economy, not support bank expansion plans.
Several media reports had warned that the European Competition Commissioner Neelie Kroes would block the deal.