French banks join CNP to set up 1 bln euro fund-report

PARIS, Oct 9 (Reuters) - France's biggest banks are teamingup with part state-owned insurer CNP to pool theirshareholdings in various companies into a fund worth at least 1billion euros ($1.3 billion), French daily Le Figaro said onTuesday.

The insurance arms of banking groups BNP Paribas ,Societe Generale and Credit Agricole arestill in talks with CNP over which stakes will go into the fundout of their 40 billion euros in collective stock investments,the paper said, quoting BNP's insurance chief Eric Lombard.

"We aren't ruling out building up new positions," Lombardtold Le Figaro, which said the fund would be looking at newinvestments in medium-sized French corporates.

Incoming regulations known as Solvency II designed tobolster insurers' capital strength and risk management havepushed insurers to cut back investments in the stock market. TheEU rules were to go into force this month but have now beendelayed at least until 2014.

($1 = 0.7711 euros)

(Reporting by Lionel Laurent; Editing by Mark Potter)

((lionel.laurent@thomsonreuters.com)(+33 1 49 49 56 85)(ReutersMessaging: lionel.laurent.thomsonreuters.com@reuters.net))