BNP Paribas, France's biggest bank by market capitalisation, today joined a recent European rush to pay back the government for its financial support during the credit crisis.
The bank launched a capital increase for €4.3 billion and said it was reimbursing the French state early on its capital advance made during the financial crisis.
BNP Paribas said the capital increase would be an underwritten rights issue with preferential subscription rights for ordinary shareholders.
It added it would, as of October, reimburse the €5.1 billion in non-voting shares subscribed to by the French state on March 31st and will make a payment of €226 million, calculated over the seven-month period.
The move, making the most of low rates and recovering share valuations - with the CAC-40 blue-chip index breaking the 3,800 points index for the first time since October 2008 - will also free BNP Paribas from the state's conditions for its financial help, including limits on bonus payments.
Among European banks, Italy's Unicredit and Intesa Sanpaolo are set to raise funds in an effort to keep politicians at a distance and take advantage of healthy capital markets.
Britain's Lloyds Banking Group and Royal Bank of Scotland are also considering raising billions from equity raising or asset sales to limit the state's stake.
Swiss bank UBS chief executive Oswald Gruebel told the Financial Times the bank also wanted to cut ties with the Swiss government by buying its way out of a bad bank deal and aimed to return to health within a year.
"BNP Paribas has increased its loan advances in France by €5.5 billion over the last 12 months," he added.
Reuters