France Could Take Further Steps to Curb Lending in 2018
January 18 2018 - 12:50PM
Dow Jones News
By William Horobin
PARIS--French authorities could take extra measures to curtail
bank lending to large businesses if the expansion of credit
significantly outpaces economic growth, the Bank of France said
Thursday.
In a speech to bankers gathered at the Bank of France, the
bank's governor, Francois Villeroy de Galhau, said authorities
could activate so-called counter-cyclical capital buffers if needed
in 2018. The measure gives bank regulators the scope to ratchet up
banks' minimum capital ratios if they see rising risks to the
economy from the financial system.
"If the risks to the credit cycle were to increase [...] we are
ready to act further at any moment in 2018, if necessary by
activating counter-cyclical capital buffers," Mr. Villeroy de
Galhau said.
In December, France's High Council for Financial Stability,
which brings together market and financial regulators, the central
bank and the finance ministry, already said it would prepare
measures to limit the exposure of France's systemic banks to "the
most indebted large resident companies" to 5% of the capital of
those banks. The council warned at the time that the debt level of
France's nonfinancial companies had risen to 71.8% of gross
domestic product while the level for the whole eurozone was
falling.
Mr. Villeroy de Galhau said Thursday the measure that was
decided in December will apply from July 1 once it is approved by
European authorities.
-Write to William Horobin at william.horobin@wsj.com
(END) Dow Jones Newswires
January 18, 2018 13:35 ET (18:35 GMT)
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