Socialist outsider in French presidential race proposes bank supertax

PARIS (Reuters) - French firebrand socialist Arnaud Montebourg said on Wednesday he would levy a supertax on banks to raise 5 billion euros ($5.2 billion) if elected president in May and that he was prepared to nationalize a bank too.

French Socialist Party primary election candidate Arnaud Montebourg announces his program in Paris, France, January 4, 2017. REUTERS/Jacky Naegelen

The 54-year-old, an outsider in the race who was economy minister early in the current Socialist government, made the policy promise ahead of a late-January primary contest for the ruling party’s presidential ticket.

“The five biggest French banks made a profit of 25 billion euros last year, so I propose a supertax of five billion euros,” said Montebourg.

The stance is evocative of President Francois Hollande who called the financial sector his “enemy” before his election in 2012.

Hollande slapped a supertax on the rich in 2012 but waved a discreet goodbye to the levy two years later when he switched course and adopted more business-friendly reforms, a shift that set him on a collision course with Montebourg and ended the minister’s time in office.

In the wake of the global financial crisis that erupted in 2008, Britain also targeted bankers, first with a tax on bonuses under Labour Prime Minister Gordon Brown and then a levy on banks’ balance sheets under a Conservative government.

Hollande is not seeking a second term and will leave behind a Socialist Party divided between hardline leftists like Montebourg, who want a return to its more traditional Socialist roots, and moderates like former prime minister Manuel Valls.

Pollsters tip Valls to win the party’s Jan. 22 and 29 primary contest, but the presidential race is expected to come down to a runoff between conservative Francois Fillon and National Front leader Marine Le Pen, a duel Fillon is tipped to win.

Mindful of the faultlines running through the party, Valls on Tuesday courted traditional leftwingers with promises to avoid draconian spending cuts and push through welfare reforms.

Montebourg, who surprised by scoring a sizeable 17 percent of votes in a previous Socialist primary in 2011, said banks were to blame for a financial crisis that inflated France’s national debt by 20 percent.

He said that, if elected, he would also oblige banks to separate retail business from financial market activities, cap traders’ pay and ensure that retail banking became a bigger portion of their overall business.

“If this measure does not help to replenish financing of the economy I am ready to nationalize a bank to show the way by example,” he said.

Five leading banks in France are BNP Paribas, Societe Generale, Credit Agricole, BPCE and Credit Mutuel.

($1 = 0.9586 euros)

Editing by Andrew Callus and Richard Lough