A day to forget in France: on the stock exchange and elsewhere. The explosion at a nuclear plant near Avignon has attracted media attention and focused the concerns of the average French. Before that, however, another type of "explosion" had affected the markets. And the fire continues to burn: on the Paris Stock Exchange, the collapse of the country's major banks. Alias, one of the largest credit giants in all of Europe. Apparently unsinkable. Matched by the presence, in the background, of a strong and interventionist state "that will never bring them down", they all say in unison. Who is to blame for the declines in the Stock Exchange? Of the usual Greece. But perhaps also (and increasingly) of Italy.
The three groups in the eye of the storm are Bnp Paribas, Crédit Agricole and Société Générale. The former lost 12% around 15 pm, down 30% compared to the beginning of the year. CA was at minus 46 percent and minus 8,5 percent, respectively. But for days the main victim of the latest financial storm has been Société Générale, whose share has slipped below 48 euros, even to its historic lows (-18% since last January 60st and -72% from the highest level ever reached: 91,6 .23 euros, touched on March 2007, XNUMX).
Already under pressure for several days, if the shares are collapsing further it is due to a rumor that has been circulating since this morning in Paris: the three banks will undergo a downgrading by Moody's. Everything is already known (to be verified, however). The date of the announcement, Thursday. The time, 14. The substance of the decision that should be taken by Moody's (among the "big three", the agency, let's face it, most discredited in recent times): the loss of a level for Bnp Paribas and for Crédit Agricole (respectively to Aa2 and Aa1) and even two for SocGen (now rated Aa2), which would therefore end up with the worst grade. Greece would still be the reason for the downgrade.
And the exposure to the Greek bonds of these credit giants: a whopping four billion for Bnp Paribas, 1,6 for Société Générale and 320 million for Ca. The particularly severe treatment of Crédit Agricole, despite a relatively small, is due to the fact that CA also controls a major (and shaky) retail bank in Greece, Emporiki. Why, then, the greater severity of the same market towards SocGen compared to Bnp Paribas which is also exposed for more than double the value of its colleague?
The latest half-year reports of the two banks are on the same wavelength, with profits, but with sharply declining profits. Let's say that Bnp Paribas can still count on an image of solidity and prudence, precious these days. There is nothing to be done: Société Générale, on the other hand, still bears that shadow of unreliability cast by the crazed trader Jerome Kerviel scandal of 2007, and by the bank's frenzied activity on the derivatives front in those unfortunate times. Again this morning Frédéric Oudéa, the CEO, tried to calm the waters by invoking a new reduction in investment banking activities. Because SocGen wants to go back to being a "normal" bank. The cautious reference of the Deep France family. We will see.
Meanwhile, the current storm needs to be stemmed. Blame only Greece? Someone in Paris begins to peep from parts of Italy. The three banks, at the center of repeated discounts, are present in Italy, in particular Bnp Paribas through Bnl, but also Ca (with Cariparma) and SocGen (which controls, among others, Fiditalia). But these assets are not so much the real Achilles heels of the three banks (indeed, especially for Ca, the presence of Cariparma is almost an advantage for improving its accounts). No, the biggest risk investors see on the horizon is exposure to Italian bonds.
Andrea Tueni, an analyst at Saxo Banque, spoke clearly this morning: “Moody's doesn't just evaluate the exposure to Greek debt. But the other risks of contagion. Socgen has a strong exposure to the Italian one: this is the new big problem of the French institutes, also of the other two in Moody's sights”. Although the top management of SocGen itself denied the need for a capital increase again this morning, Tueni is sure that "the issue of a recapitalization by the state for banks in difficulty is now central". The economist Marc Fiorentino, in the newspaper La Tribune, calls for a "temporary nationalization" of the major French banks. The future is scary. That of Italy in particular.
