Tags: SocGen | CEO | France | US

SocGen CEO: France Isn't US, Won't be Downgraded

Thursday, 11 Aug 2011 08:25 AM

Markets shouldn't assume that just because Standard & Poor’s downgraded the United States that France is next, says Frederic Oudea, CEO of Societe Generale, France’s second-largest bank.

"I find it a bit surprising [that] just because one country is downgraded by one notch at the end of the day that others should follow," Oudea tells CNBC.

Societe Generale's stock prices have been plunging on fears that the European debt crises will spark a run on banks in France and beyond.

“It’s a strange way to think about the situation in the economy," Oudea says.

Ratings agencies have said they are sticking with their AAA ratings for the French economy.

French banks also don't have as much exposure to banks in Italy and Spain, where debt issues are plaguing economies, as markets seem to think.

Societe Generale also has enough capital set aside to meet Basel III solvency requirements by the end of 2013.

Bank of America-Merrill Lynch, meanwhile, cut its view on the European banking sector to "neutral" from "overweight."

"Having hung on to a value argument for the banks sector year-to-date, our latest downgrade to global growth expectations makes its difficult to sustain conviction in this argument and we lower our sector weighting to neutral," Merrill strategists write in a note, according to Reuters.

"As long as EU peripheral debt issues remain in the headlines despite the best efforts of the European Central Bank, banks will likely remain a focal point for negative risk appetite and we believe this will weigh against optically cheap valuations and low investor positioning."

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Markets shouldn't assume that just because Standard Poor s downgraded the United States that France is next, says Frederic Oudea, CEO of Societe Generale, France s second-largest bank. I find it a bit surprising [that] just because one country is downgraded by one notch...
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