The world financial crisis has brought stock markets to their knees, each affected in varying degrees. In France, however, the government continues to hold faith in the solidity of its banking system. Nonetheless, the state was forced to rescue one bank - the Franco-Belgian concern Dexia - which specialises in loans to local authorities. This was the first such bailout in 14 years.

The specialisation of French banks isolates them from damage

The first victims of the crisis were American investment banks, which collapsed one after the other. But France does not have banks like Bear Stearns or Lehman Brothers.

Contrary to their Anglo-Saxon counterparts, French banks are principally for deposit. Société Générale and BNP Paribas, although they also engage in investment activity, are still principally savings banks, and thus less exposed to fluctuations in the market.

French banks are also less susceptible to collapse because they are more risk-averse. Christian de Boissieu, Professor of Economics at the Sorbonne, told FRANCE 24: “Overall, our system is less exposed to subprimes, so it is more resistant. There are several reasons for this, most notably that French establishments are more cautious.”

Such caution may explain in part the sturdiness of French banks up until this point. However, Boissieu is guarded in his statement : “We have seen surprise after surprise with this crisis, so whoever can foresee how France would come out of this mess would have to be a genius.”

How much wiggle room for politics to get involved?

On Tuesday, French President Nicolas Sarkozy gathered together the principal heads of the banking and insurance world to discuss the French financial situation during this time of global crisis. The government simply indicated that it would take “new measures” in the near future.

Evariste Lefeuvre, assistant director of research at Natixis, told FRANCE 24, that this meeting was a placebo. He continued: “This is a pointless non-event for the markets. We will once more say that the banks are in good health, but this is what they have been saying for a year and a half!”

According to Lefeuvre, the authorities are quite shaken up, but they have little room for manoeuvre. “There is a problem with interbank money markets, so the role of the state is relatively weak.” He feels that the government’s announcements were meant only to reassure a worried population: “They don’t dare say that things are going badly.”