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If growth continues to slow down this won’t be nearly enough to cover capital yet to be lost.
Also, with more slowing, the French deficit widens threatening their solvency and ability to fund:
France injects ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬10.5bn in the six largest banks; doubts about the 2009 GDP growth forecast
The French Finance Ministry said Monday night that the French government will inject E10.5 billion worth of fresh capital into the country’s six largest banks between now and the end of the year by purchasing subordinated debt securities.
Credit Agricole will get ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬3 billion, followed by BNP Paribas with ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬2.55 billion, Societe Generale with $1.7 billion and Credit Mutuel with ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬1.2 billion. Les Caisses d’Epargne will get ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬1.1 billion and Banques Populaires ÃƒÂ¢Ã¢â‚¬Å¡Ã‚Â¬950 million.
The banks have agreed to sell subordinated debt securities in those amounts, and they will carry a risk premium of about 400 basis points.