French left captures upper house

25 September 2011 Last updated at 21:48 GMT The French Socialists are savouring their historic victory over the conservatives French President Nicolas Sarkozy's conservative government has lost its majority in the Senate for the first time in recent French history.

The Socialist Party and its Communist and Green allies have won enough seats to gain control of the upper house.

Their victory comes just seven months before the country's presidential election in April.

Right-wing parties have controlled the Senate since the Fifth Republic was founded in 1958.

Early results from the indirect elections showed left-wing candidates took at least 23 seats from the governing conservative party, giving them an absolute majority.

"The 25th of September, 2011, will go down in history," Jean-Pierre Bel, head of the Socialist group in the Senate, said on French television.

"The results of this Senate election represent a real comeuppance for the right."

France's conservative Prime Minister Francois Fillon has said the right had suffered from its divisions and that the left had made a "strong breakthrough".

"The moment of truth will come next spring. The battle begins tonight," he said in a statement.

Of the 170 seats up for grabs in the election, Mr Sarkozy's centre-right UMP party had 147 seats out of a total 343 to the Socialist Party's 115 before Sunday's vote.

The number of seats in the upper house is being increased to 348 to reflect an increase in population.

View the original article here

Read More

French banks feel eurozone pain

14 September 2011 Last updated at 19:13 GMT Two of the top three banks in France had their ratings cut Credit rating agency Moody's has downgraded two French banks after reviewing their exposure to Greek debt.

Credit Agricole was cut from Aa1 to Aa2 and Societe Generale from Aa2 to Aa3.

A third bank, BNP Paribas, was kept on review for a possible downgrade.

German Chancellor Angela Merkel, French President Nicolas Sarkozy, and Greek Prime Minister George Papandreou later moved to ease market concerns over Greece by saying it was an "integral" member of the eurozone.

Meanwhile, the European Commission president, Jose Manuel Barroso, said he would put forward a proposal for the 17 eurozone governments to jointly guarantee their debts, via so-called eurobonds.

Stressed markets

Moody's said it was also planning to extend its review of all three banks "to consider the implications of the persistent fragility in the bank financing markets, given the banks' continued reliance on wholesale funding".

This further review could result in an additional one-notch downgrade, the agency warned.

The markets for short-term cash lending between European banks have become increasingly stressed in recent days, while share prices in European banks have fallen sharply.

Credit Agricole and Societe Generale have seen their share prices fall by about two-thirds since February, while BNP has fallen by more than half.

By late Monday afternoon trading, shares in Societe Generale had dropped a further 10%, eventually recovering some losses to end down 2.9%.

BNP Paribas finished 3.9% lower, while Credit Agricole rose 1.2%.

Both BNP Paribas and Societe Generale have issued statements in recent days to clarify the extent of their exposure to Greece and other troubled eurozone economies.

Moody's backed the two banks, saying they both had enough capital to provide "an adequate cushion to support its Greek, Portuguese and Irish exposures".

Continue reading the main story

Fairly or not, these banks have been viewed as indulging in more creative accounting than other banks”

End Quote Robert Peston Business editor, BBC News SocGen has a total exposure to Greek government and commercial debts equal to 6.6bn euros, and BNP Paribas has 8.5bn euros, according to their disclosures to the European Banking Authority - both much lower than Credit Agricole's total of 27bn euros.

Nonetheless, Moody's still decided to downgrade Societe Generale, as it felt the bank no longer benefited from a higher level of French government support than its two rivals.

'Small downgrade'

All three banks' ratings have been on review since 15 June, and Moody's decision had been widely anticipated by the markets.

French central bank head Christian Noyer welcomed the downgrade decision as "relatively good news".

Continue reading the main story "French banks have an excellent rating, the same level as other major European banks - HSBC, Barclays, Deutsche Bank, Credit Suisse," he said.

"It's a very small downgrade, and Moody's had a higher rating than the other agencies so it's just put them on the same level or slightly better than the others."

However, the downgrade is likely to put further pressure on the banks, as many investors limit how much they are willing to lend to them or invest in their shares based on their credit ratings.

Credit Agricole said that it had decided to extend a guarantee to its investment banking subsidiary in response to the rating review.

Meanwhile, BNP Paribas joined Societe Generale in announcing large asset sales in order to reduce its total exposures.

The bank said on Wednesday that it would sell 70bn euros of assets, or 10% of the bank's entire balance sheet, with a focus on its dollar-denominated loans.

On Tuesday, BNP denied a report in the Wall Street Journal claiming the bank was no longer able to borrow in dollars.

Meanwhile, the European Central Bank confirmed that two unnamed eurozone banks have asked for it to provide $575m of short-term dollar loans - the first time the emergency facility has been used since 17 August.

View the original article here

Read More