French Lawmakers to Quiz Bank Bosses

Paris, France
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The heads of France's top three banks will face questions on Wednesday from a parliamentary committee looking into proposed reforms designed to curb risky trading and beef up regulatory oversight.

The draft reforms, which will demand banks separate their proprietary trading activities from their client-linked business, have been hailed by France as a model for the rest of Europe, but critics say they fall short of President Francois Hollande's campaign pledge to get tough on finance.

The heads of BNP Paribas SA, Societe Generale and Credit Agricole SA are likely to echo the argument of lobby group the French Banking Federation, which has said the reforms will be costly to implement, and will discourage lending.

However,lawmakers' questioning may shed more light on each bank's precise exposure to prop trading, something which until now no French bank has been willing to divulge.

"We have not put a figure on the reform's adaptation cost but it will be big,"Credit Agricole Chief Executive Jean-Paul Chifflet said in an interview posted on the federation's website Tuesday.

The Brussels-based group Finance Watch has meanwhile called for the reforms to be toughened by asking banks to separate more of their activities, and to put a precise number on the reform's impact.

"(Our recommendations) aim to give banks greater capacity to serve the real economy and to protect the taxpayer from a potential bank failure," Finance Watch's Thierry Philipponnat said.

Analysts have said the earnings impact of separating activities as proposed by the draft reform would be "limited" or "marginal".