* SocGen chief doubts prop trading ban will be priority
* Warns financial transactions tax could make credit pricier
* Urges incoming EU authorities to focus on economy
By Mark John
PARIS, Feb 12 European Commission moves to ban top EU banks from market bets with their own money will run out of momentum once this year's health check on the sector shows it is in sound shape, the head of France's Societe Generale said.
Such an outcome would be a victory for the French view that Europe's banks have drawn lessons from the financial crisis and should now be given the regulatory room needed to compete with foreign rivals, notably from the United States.
Speaking at the Reuters Euro Zone Summit 2014, Frederic Oudea said the current EU executive would not have time to put in place a proposed ban on proprietary trading before the end of its mandate, and doubted such a move would be high on the agenda of the incoming Commission and European Parliament.
"I don't believe it will necessarily be their priority for the year 2015, especially after the AQR (Asset Quality Review) which should give comfort to politicians and public opinion regarding the resilience of the banking sector," he said.
The AQR is part of a wider assessment of the euro zone's banks to be carried out by the European Central Bank before it assumes new supervisory functions in November.
European voters will go to the polls in May to elect a new parliament, and the mandate of the European Commission of Jose Manuel Barroso will expire a few months after that.
Proprietary trading accounts for only a small amount of European banking revenue but is seen by some observers as among the riskier behaviours that exacerbated the 2008-2009 financial crisis.
France has argued that proposals unveiled by EU financial services commissioner Michel Barnier on Jan. 29 would give U.S.-based rivals in London the upper hand. U.S. banks will be operating under their own regulatory limits.
Oudea said national legislation already existed in France and Germany ring-fencing proprietary trading, which he said would in any case remain a small part of banks' activities.
"These laws are well-conceived and will be good laws to prevent us from going back to a model that would be too risky. This should be the model going forward and I think the new Commission and the new Parliament will have to look at this."
Oudea was equally wary about moves to create a financial transactions tax in the euro zone, a levy which will make banks repay some of the aid that kept them going during the crisis.
"The risk is that you have activities that will move out of Europe and that certain companies will suffer when they issue debt - it will become more pricey. I think and I hope that pragmatism will prevail," he said.
Euro zone countries discussing the tax are trying to hammer out a revised proposal. Some capitals want to exempt sovereign bonds, interbank securities repurchase deals and pension fund transactions from the tax.
Societe Generale, France's No. 2 listed bank, on Wednesday reported it had swung to profit in the fourth quarter of 2013, rebounding from a year-ago loss plagued by writedowns.
Oudea said his bank was expecting a "slow improvement" in the euro zone economy through 2014 and 2015, with its home market France seeing growth edge up from 0.6 percent this year to 1.2 percent next - forecasts below the government's own predictions of 0.9 percent and 1.7 percent respectively.
He was relaxed about the prospect of further turmoil in emerging market economies, saying Societe Generale remained broadly positive on their long-term prospects. He did not see any near-term drag on the bank's main markets from U.S. Federal Reserve tapering, which he expected to be gradual.
The firmly pro-EU Oudea acknowledged that any gains by Eurosceptic parties in May's European Parliament elections could make further political steps towards EU integration harder, and called on the bloc's leaders to focus instead on more pragmatic efforts to boost Europe's economy.
"Before thinking about some huge political plan which might not take place anyway, (look) particularly on the economic side," he said, urging new joint EU initiatives on energy, infrastructure and the digital sector. (editing by Elizabeth Piper)