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French state bank will not prop up "lame ducks"
October 19, 2012 / 6:11 PM / 5 years ago

French state bank will not prop up "lame ducks"

PARIS (Reuters) - France’s new state investment bank will focus on lending to small- and medium-sized companies and not prop up “lame duck” firms despite a wave of layoffs and plant closures by major companies, its future chief said on Friday.

Jean-Pierre Jouyet, who has been named by France’s Socialist government to head the lender, also said there was a question mark over whether the Public Investment Bank (BPI) should sell off the French state’s holdings in large listed companies.

A wave of large French firms have announced major job cuts in recent months, including airline Air France (AIRF.PA), carmaker Peugeot (PEUP.PA) and drugmaker Sanofi (SASY.PA).

“The BPI’s role is to maintain activity and not prop up lame ducks,” Jouyet told Europe 1 radio, when asked if the company would help to save two ArcelorMittal ISPA.AS blast furnaces at Florange in northeast France threatened with closure.

“We aim to finance projects for the future. For everything else, there are other mechanisms which can be used,” he said. “The BPI’s role is to finance small- and medium-sized companies.”

Industry Minister Arnaud Montebourg was quick to respond to the comments, saying in a statement he had met with Jouyet who had assured him the BPI would also maintain and support French industrial production.

Montebourg said the Strategic Investment Fund (FSI), which will be folded into the new lender, could also take part in any credible takeover plan for the blast furnaces at Florange steel, which ArcelorMittal has announced are to close.

The steelmaker has given the government two months to find a buyer before it shuts the site, but industry experts doubt a buyer will come forward.

The fate of Florange became a symbol of France’s industrial decline during the campaign for May’s presidential runoff which swept Socialist Francois Hollande to power.

With unemployment already running at a 13-year high, telecoms equipment maker Alcatel-Lucent ALUA.PA on Thursday detailed plans for 5,490 job cuts, saying a quarter of the total will be in France.

Jouyet said the BPI would start operations in January provided its creation was swiftly approved by parliament.

In a separate interview in daily Le Monde, he said there was a question mark over whether the BPI should sell off the state’s stakes in listed companies currently held by the Strategic Investment Fund (FSI), which will be folded into the new lender.

The fund has a 14 percent holding in France Telecom FTE.PA and 7.4 percent of hotel chain Accor (ACCP.PA) and stakes of less than 5 percent in Alcatel-Lucent and Danone (DANO.PA).

“The BPI should not rule out selling these stakes in large groups which do not need its financial support to strengthen the resources at its disposal,” Jouyet told Le Monde.

Reporting by Daniel Flynn; additional reporting by Vicky Buffery; editing by Ron Askew

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