5 billion in the second instalment of the convertible securities

The State will come in force in the new set Banque Populaire - Caisse d'Epargne. After appointed headed by François Pérol, Secretary General Deputy of the Elysee (read below), public authorities are ready to inject up to 5 billion of capital to the financial strength of the new set. "Between EUR 2.5 billion and 5 billion additional euros will be made subordinate loans which would be convertible into shares, due," said yesterday morning on Europe 1 Christine Lagarde, the Minister of the economy. "It will be certainly closer to the high range," according to a source close to negotiations.

The Banques Populaires and Caisses d'Epargne already received EUR 2 billion of public funds in December in the first round of recapitalisation of banks. The state their promised some hybrid securities or preferential shares, or EUR 2.5 billion in the second instalment of the convertible securities. It is therefore ready to wear this effort up to 5 billion, which would bring the total support both mutual banking groups at EUR 7 billion in six months. Convertible the idea is to poses the threat of an entry to the capital. The State could hold up to 20 of the capital of the second French banking group. This new injection should probably receive prior approval from Brussels.

Christine Lagarde has also suggested that the State would be represented in the direction of the new bodies together. "When you put public money in a banking network, it wants to see how it evolves, it participates in its strategy and it participates to its Board of directors or the Supervisory Board according to the chosen structure," insisted the Minister. Christine Lagarde has not confirmed the appointment of François Pérol, same

If it was assured that he had "confidence and competence" required for this position. A way to not inflame the controversy that is born on the arrival of this close to Nicolas Sarkozy to the commands in the Group (read below). The State also planned to nominate 4 of 18 directors of the new central body common to both institutions.

The authorities "determined".

In so doing, the State away from the philosophy adopted so far in support to banks. It not only more than a simple financial reinforcement, but pre-paid assistance of influence on policy decisions of the institutions concerned. For BNP Paribas, which plans to issue 5.5 billion euros of preferential shares to the public authorities, the Government had not required to be represented in the bodies of governance.

It is true that BNP Paribas totalled more than EUR 50 billion of own funds, against EUR 20 billion for the only central body Banque Populaire - Caisse d'Epargne (EUR 40 billion in total). In addition, public authorities intend to follow more closely the decisions that will be taken on Natixis (read here), the source of all problems and that has already gobbled up billions of own funds. Sitting in the new set Ecureuil - Banques Populaires, as in La Banque Postale, "Wants the State to finally show its determination to preserve the French savings", said one observer.