(Reuters) - Bank of France Governor Christian Noyer said in a published interview on Saturday that France could preserve its coveted AAA credit rating if it “breaks with the culture of deficits.”
“If we break with a culture of deficits, we will maintain our triple A,” Noyer said in the brief interview with the Journal du Dimanche released ahead of publication on Sunday.
Last month, Moody’s Investors Service warned it was scrutinizing the outlook on France’s rating in the light of slower economic growth and costly commitments to euro zone bailouts.
French President Nicolas Sarkozy has made reducing France’s deficit — and maintaining the country’s AAA rating — a top priority and his government on Monday is expected to announce new cost-cutting measures. <ID: nL6E7M439L>
Sarkozy is trying to slice France’s public deficit to 4.5 percent of GDP next year from 5.7 percent this year.
Noyer, who is also a European Central Bank governing council member, also told the Journal du Dimanche that it was not up to the ECB to indefinitely prop up states in financial difficulty.
“The role of the ECB is not to indefinitely finance states,” he said. “The solution is to be found in repairing the public finances of euro zone countries and not central banks’ printing presses.”
Regarding French banks, Noyer said they were prepared to reduce bonuses and dividends of their shareholders.
“They are ready for it and they said that to the prime minister, Francois Fillon, last Wednesday,” he said.
French banks have already promised to boost their capital levels by 8.8 billion euros without government help to reach tougher targets set by European regulators for mid-2012.
Noyer said four French banks — BNP Paribas (BNPP.PA), Crédit Agricole (CAGR.PA), Société Générale(SOGN.PA) and BPCE, the unlisted parent of Natixis, (CNAT.PA) —would boost their capital levels to between 9 percent and 9.5 percent between 2014 and 2018.
Reporting by Alexandria Sage; Editing by Mark Heinrich