(Full story) (exclusive to Reuters)
By Lionel Laurent
PARIS, Oct 4 (Reuters) - French mortgage bank Credit Immobilier de France (CIF) was benefiting from emergency Bank of France funding to keep it afloat months before a high-profile government rescue, banking sources told Reuters.
The news comes ahead of negotiations between France and European Union regulators on the fate of the bank and its 2,500 staff.
It shows how actively the Bank of France was working behind the scenes to prevent a crisis of confidence hitting the banking sector of the euro zone's second-largest economy.
In a controversial move that jarred with campaign rhetoric of a crack-down on excess risk-taking in the financial sector, French President Francois Hollande agreed last month to guarantee the bank's debt after rating downgrades starved it of funding.
Yet according to one source with direct knowledge of the matter, more than 2 billion euros ($2.6 billion) in emergency funds had been lent by then to CIF via the Bank of France, implying the lender had been struggling to raise money.
"When CIF ran into problems earlier this year it was forced to use the (central-bank) system," one source with direct knowledge of the matter told Reuters. "The exact number is unclear but it was more than 2 billion euros."
By Lionel Laurent
PARIS, Oct 4 (Reuters) - French mortgage bank Credit Immobilier de France (CIF) was benefiting from emergency Bank of France funding to keep it afloat months before a high-profile government rescue, banking sources told Reuters.
The news comes ahead of negotiations between France and European Union regulators on the fate of the bank and its 2,500 staff.
It shows how actively the Bank of France was working behind the scenes to prevent a crisis of confidence hitting the banking sector of the euro zone's second-largest economy.
In a controversial move that jarred with campaign rhetoric of a crack-down on excess risk-taking in the financial sector, French President Francois Hollande agreed last month to guarantee the bank's debt after rating downgrades starved it of funding.
Yet according to one source with direct knowledge of the matter, more than 2 billion euros ($2.6 billion) in emergency funds had been lent by then to CIF via the Bank of France, implying the lender had been struggling to raise money.
"When CIF ran into problems earlier this year it was forced to use the (central-bank) system," one source with direct knowledge of the matter told Reuters. "The exact number is unclear but it was more than 2 billion euros."
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