By Lionel Laurent and Leigh Thomas
PARIS, June 15 (Reuters) - France defended its banks' financial firepower on Wednesday after rating agency Moody's said it might downgrade them because of exposure to Greece's debt-stricken economy.
The Moody's warning, which cited the possible impact of a Greek debt restructuring as policymakers thrash out a fresh rescue package, dragged down French bank share prices and pushed up the cost of insuring them against default.
"We are not worried ... French banks are among the best rated currently and the most solid of the big international banks," government spokesman Francois Baroin told reporters.
French Secretary of State for European Affairs Laurent Wauquiez called for calm and reiterated French opposition to any Greek debt restructuring classed as a default.
"French banks are exposed to Greece...(but) they are less exposed than the German banking sector, for instance," he said. "On all these subjects we need to stay calm."
French banks are second to Germany in exposure to Greek public-sector debt but they have the highest overall bank exposure to the Greek economy, according to the Bank for International Settlements, making them vulnerable to a potential restructuring of Greece's 340 billion-euro debt mountain.
They have however enjoyed above-average credit ratings and cheap funding costs relative to peers, helped by France's 'AAA' sovereign rating and strong household balance sheets.
With the macroeconomic picture darkening and the funding advantage slowly in retreat, a downgrade is perhaps overdue for top French banks BNP Paribas (BNPP.PA), Societe Generale (SOGN.PA) and Credit Agricole (CAGR.PA), some analysts say.
"A downgrade of all three French banks would be an appropriate reflection of realities in the credit markets," said RBS analyst Jorge Mayo, adding Germany's Deutsche Bank (DBKGn.DE) was now trading at narrower spreads than the French.
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