French Bank Reforms Not ‘Soft’: SocGen CEO
Frederic Oudea, chief executive of Societe Generale, has hit out at critics who have argued that France's bank reforms, unveiled on Wednesday, do not go far enough and marks a U-turn by President Hollande who had promised a "long war" on the financial sector.
"This law goes very far, we're going to be the first country in practice to implement the law that will give the regulator new capacity to control the risk, go through the balance sheet and to segregate what is useful to the economy and what is not. We will be requested to put these activities into a dedicated subsidiary with no guarantees from the parent company and certain activities will be prevented," Oudea said.
He added that authorities were adding to the burden for banks already facing considerable regulatory challenges through the Basel III rules, which require banks to hold more capital.
"We have a lot already to do and we were not asking for anything like this," Oudea said in response to critics who said the banks' intense lobbying had succeeded.
" It's good for the economy, companies and growth and job creation – not for banks," Oudea said. "I don't think it's a particularly soft reform and we will be under very strict scrutiny from the regulator and on top of what we have to do [it] is an additional constraint. But we have been able to convince that capital markets are good for the economy."
"The main challenge is growth and we should look at that in a practical way. We need to allow banks to manage the Basel III transition from lending to more capital market mechanisms," he said.
Critics of the reforms have said the reforms do not adhere to the Liikanen report. Erkki Liikanen,governor of Finland's central bank delivered his recommendations to reform the European banking system earlier this year and recommended ring fencing several risk-taking activities.
Speaking to CNBC in Paris, Oudea hinted at job cuts at Societe Generale.
"We have to anticipate for low growth of revenues and we'll withdraw from certain activities and client behaviors of low growth and interest rates."
- By CNBC's Shai Ahmed, Follow her on Twitter @ shaicnbc