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London/Paris - Shares in French bank Societe Generale fell
more than 21% on a whirlwind of market rumours, before a spokesperson
categorically denied all rumours relating to the bank’s financial solidity.
“SocGen categorically denies all the market rumours,” the
bank spokesperson told Reuters.
Other French banks also fell sharply, with BNP Paribas down
more than 13% and Credit Agricole off more than 14% on persistent rumours about
a downgrade of France’s sovereign AAA rating.
The three major ratings agencies all confirmed on Wednesday
and Tuesday that their French sovereign rating outlook is stable.
“The rumours on the French triple-A rating are having a
catastrophic impact, even despite the denial from credit agencies. Shorts are
on a rampage; it’s a calamity. This has nothing to do with fundamentals,” said
Christian Jimenez, fund manager and president of Diamant Bleu Gestion, in
Paris.
Societe Generale on its website mentioned an apology by the
Mail on Sunday for a story that said the bank was in a “perilous” state and
possibly on the “brink of disaster”.
“We now accept that this was not true, and we unreservedly
apologise to Societe Generale for any embarrassment caused,” the newspaper
said.
Earlier on Wednesday, French President Nicolas Sarkozy
summoned an emergency meeting with key government ministers and the head of the
French central bank for what his office described as a “working meeting on the
economic and financial situation”.
Some investors later speculated that Societe Generale
officials were present at the meeting, but an official at the Elysee
presidential office denied that the bank had been involved.
French banks’ credit default swaps were sharply wider, with
BNP Paribas’ five-year CDS widening 19 basis points to 231, Societe Generale’s five-year CDS 9.5 basis points wider at 284, and Credit Agricole’s 9.5 basis
points wider at 251.5.
