French Banks Are ‘Very Solid’ Despite Selloff, Villeroy Says

(Bloomberg) -- French banks are “very solid” despite the investor selloff triggered when President Emmanuel Macron called snap elections, according to central-bank chief Francois Villeroy de Galhau.

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Lenders’ liquidity and capital strength haven’t been affected by recent market moves, Villeroy said Monday. In particular, the business model of banks is conducive to “sound” financing of the economy, he said, noting moderate intermediation margins, high lending volumes and a low cost of risk.

“French banks are and will remain a positive asset for the French economy, and for Europe as well, being among the largest and most resilient ones,” the Bank of France governor told an event in Paris to mark the 10th anniversary of the European Union’s Single Supervisory Mechanism.

Shares of Societe Generale SA, Credit Agricole SA and BNP Paribas SA all lost over 7% of their value since Macron’s June 9 announcement. That’s a much deeper than the drop suffered by the European banking sector as a whole during that period.

French government bonds have seen their yield premium over Germany jump in the wake of the snap-election call.

“French banks are very solid in their liquidity as well as in their capital,” Villeroy said.

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(Updates with more from Villeroy in final paragraph)

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