* Hedge funds' financing to stay intact, banks face curbs
* Marks shift from traditional French anti-finance rhetoric
* "Tactical" attempt to rebuild relations - fund manager
PARIS, Feb 5 France's finance minister Pierre
Moscovici defended on Tuesday a government plan to ringfence
banks' proprietary trading and leave hedge-fund financing
intact, saying that hedge funds play a vital role in the French
France's proposed bank reforms, due to be debated in
parliament later this month, would force banks to make
proprietary trading a separate self-funded entity and ban them
from owning or operating hedge funds.
Secured hedge-fund financing would be left intact.
Moscovici's stance is at odds with French politicians'
traditional anti-free market rhetoric on both left and right.
Socialist President Francois Hollande's 2012 campaign speech
blasted "speculative funds" as "vectors of instability", while
his predecessor Nicolas Sarkozy called them "predators" in 2007.
"While some of these funds have strategies that should be
criticised, today the vast majority are necessary and essential
players when it comes to financing the economy - whether we like
it or not," Moscovici wrote on his official website.
He cited the convertible bond market as an example. "Hedge
funds can represent 60 to 80 percent of demand on this market
and so are essential for placing the securities in the best
possible conditions for the companies," he said.
France's proposed bank reforms have been panned as too soft
by critics including Brussels-based Finance Watch, especially
compared with recommendations by the EU's Liikanen Commission
for a broader separation of all trading including market-making.
A Paris-based hedge-fund manager said that the government
was changing its rhetoric to drum up support for the reforms and
also to build confidence at a time of economic stagnation and
bad blood among voters over stubbornly high unemployment.
"For ten months the government has spent so much time
bashing entrepreneurs and the business world that it must be
thinking it's time to mend relations," he said. "It's tactical."
Meanwhile, the head of French bank Credit Agricole
, Jean-Paul Chifflet, warned that a stricter reform law
would hurt banks' ability to lend. "Going beyond the current
plan, with a stricter separation of banks' operations, would be
serious for our country," he told Les Echos newspaper.
(Reporting by Lionel Laurent; Editing by Louise Ireland)