BNP Paribas denied allegations of expansion in Qatar

Resource-rich emirate has talked to BNP and banks across France about acquiring stakes in their operations, says a Qatari source

BNP Paribas reiterated that France's biggest listed bank expects to hit tougher capital targets under Basel III without raising fresh funds as speculation swirled about a possible investment from the Gulf state of Qatar.
A Qatar-based source had told Reuters late on Wednesday that the resource-rich emirate had talked to BNP and banks across France over taking a possible stake given their "tremendous need" for capital.
"Regarding Qatar, BNP Paribas reiterates that it will be able to hit a core Tier 1 ratio of 9 per cent as of January 2013, that is to say six years before the deadline of 2019, without a capital increase," the spokeswoman said.
At the same time, asked about a Financial Times report that the bank planned to meet with potential Middle East investors who could help bolster its capital, she said the bank regularly talked to potential new investors in the course of normal business.
"BNP Paribas is naturally holding roadshows as it does every year to present the company and promote its business to investors across the world," she added.
The spokeswoman also dismissed as "pure fantasy" a report in the Financial Times saying BNP had asked for "emergency stress tests" to pinpoint weaknesses in France's banking system.
French banks including BNP and Societe Generale have seen their share prices fall by more than half since the end of June over fears they are undercapitalized and overleveraged in the face of the unfolding euro debt crisis.
Even the prospect of fresh capital from a sovereign wealth fund was not enough to offset worries over the health of European banks and the euro area on Thursday, with BNP, SocGen and Credit Agricole down between 5 and 8.6 percent.
A grim outlook for the U.S. economy from the Federal Reserve and signs of a slowing China and Germany drove world stocks sharply lower on Thursday and pushed investors into safer currencies and government bonds.
"It's all a question of confidence," said Francois Chaulet, fund manager at Montsegur Finance in Paris. "What could restore confidence? A real solution for Europe."
He said that a potential investment from Qatar of around 2 billion euros would be "worthless" in the face of a deterioration of the euro debt crisis and said that market valuations of euro sovereign debt implied potentially "colossal" losses for the banks if they were fully marked.
Shares of BNP were down 5.1 per cent, to 23.20 euros, at 0949 GMT, slightly underperforming a 3.9 per cent drop for the STOXX Europe 600 bank index . Rival SocGen was down 8.4 per cent, Credit AGricole was down 5.3 per cent and Natixis was down 7 per cent.
"If Qatar had been the way out of the slump, the stock would have reacted positively," a bank analyst said. "The fact is that if the Italian situation gets worse, a couple billion euros won't help."
A Mideast investment in French banks would have echoes of the peak of the financial crisis in 2008, when Qatar and Abu Dhabi bought stakes in British bank Barclays as part of a capital increase that helped the lender stay independent while rivals Royal Bank of Scotland and Lloyds ended up nationalised.