Investors say 'c'est la vie' to the latest banking crisis
Logos of 11 major French banks: Banque de France, Credit Mutuel, Credit Industriel et Commercial (CIC), BPCE, Credit Agricole, HSBC, BNP Paribas, Societe Generale, La Banque Postale, Credit du Nord, LCL.
JEREMY HOBSON: But one of the reasons for that rebound is that people aren't as worried about the health of a major French Bank -- Societe Generale. Rumors of insolvency sparked some panic selling yesterday. Let's find out what's going on from BBC correspondent Christian Fraser who joins us now from Paris. Good morning.
CHRISTIAN FRASER: Good morning.
HOBSON: Well, walk us through the nightmare scenario, Christian. What were people so worried about yesterday when it came to Societe Generale?
FRASER: Just the financial stability of the bank -- rumors were swirling around the market that one of the major shareholders was needing more cash -- the chief executive was forced to come out after trading yesterday to deny all rumors and concerns. There's even been an inquiry into where those might have come from. And today, that seems to have reassured the markets. We see a brief rally this morning in early trading. Societe Generale's shares up -- recovering almost half the losses that we saw yesterday and similar sort of moves in the other banking stocks here in Europe as well -- BNP Paribas, Agrico recovering as well.
HOBSON: Well, there's been a lot of talk this week -- how similar this crisis is to the 2008 which was more of a banking crisis -- is this now starting to look like a banking crisis instead of a sovereign debt crisis -- and are they tied together or what?
FRASER: I think they are tied together because banks depend on governments to bail them out when things get rough. In the current client, the market sees that France has pretty heavy debt and might not be able to bail out some of these banks. You know, having said that, though, I think you have to bare in mind, perhaps the mood this morning reflected that -- that the government's pretty serious about cutting debt, it's aware of what it has to do. President Sarkozy has given his ministers a week to come up with new measures to cut the deb and he's going to stick to them -- whether or not there's an election next year and however difficult those cuts may be.
HOBSON: The BBC's Christian Fraser in Paris, thank you so much.
FRASER: You're welcome.