The French Government announced yesterday that it will invest €10.5 billion in France’s six largest banks. Unlike initiatives announced in the U.S., U.K., and other European countries, the French government is purchasing subordinated debt, rather than equity capital, of the banks.

This injection of funds is part of the French Government’s €360 billion plan announced last week, of which up to €40 billion was earmarked to recapitalize banks. The €10.5 billion will be allocated as follows:

  • Banques Populaires - €0.95 billion 
  • BNP Paribas - €2.55 billion 
  • Caisses d’épargne - €1.1 billion 
  • Crédit Agricole Crédit - €3.0 billion 
  • Crédit Mutuel - €1.2 billion 
  • Société Générale - €1.7 billion

Today, in a separate announcement, the Central Bank of France stated it “would like to stress that all of the banking groups concerned currently have entirely satisfactory levels of [their] own funds,” and that the “issuance of subordinated debt subscribed to by the Government will allow the banking groups concerned to ensure the proper financing of the economy and to maintain high solvency ratios during a period in which market conditions are preventing them from raising the capital they require.”