French politicians face down united bankers' front

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(Reuters) - The heads of France's top three banks said tougher laws to curb risky trading would put the country at a competitive disadvantage as it struggles with record unemployment and a grim economic outlook.

The CEOs of BNP Paribas SA (BNPP.PA), Societe Generale (SOGN.PA) and Credit Agricole SA (CAGR.PA), who were appearing before a parliamentary committee on Wednesday looking into curbing proprietary trading, defended their trading businesses as low risk and vital to the economy.

Proprietary trading is when a bank uses its own capital and balance sheet to carry out trades rather than on behalf of a customer.

The draft law will demand banks separate such activities from client-linked business and has been hailed by France as a model for the rest of Europe.

But critics say the law, which falls short of the suggested ring-fencing of investment banking in Britain's Vickers' reform, for example, breaks President Francois Hollande's campaign pledge to get tough on finance.

France's unemployment rate is at its highest in 13 years as the country struggles with stagnant growth and a pullback in bank credit as lenders across Europe slim down to meet incoming post-crisis Basel III capital requirements.

"Given the significant number of reforms that have come out... This (French) law is neither pressing nor a priority," Jean-Paul Chifflet, Credit Agricole's chief executive, told the panel.

The three heads addressed each other by name and echoed each other's arguments that the proposed law would put them at a disadvantage against their international rivals.

When asked how much of their revenue came from prop trading, SocGen CEO Frederic Oudea admitted the figure was small, at around 1 percent of French banks' total group revenues.

"Within the 15 percent of revenue that comes from capital markets... (prop trading) is less than 10 percent, though it varies depending on the bank," Oudea said.

Citing plans for a banking union in Europe with the European Central Bank as its supervisor - as well as the Basel III global rulebook designed to crack down on risk after the 2008 financial crisis - the bankers said France was in danger of going it alone by forcing lenders to carve out "speculative" activities.

"It would be shocking to have a French law that is not compatible with Europe," BNP head Jean-Laurent Bonnafe said.

Several lawmakers mocked the CEOs for criticizing a law that would only impact a tiny slice of business. "If I understand correctly, this law doesn't bother you that much," said Socialist deputy Karine Berger.

Speaking to the same committee, French Finance Minister Pierre Moscovici said he was open to the possibility of amending the bill in parliament so that some market-making activities might be put into the prop basket as well - but urged caution.

"Yes, let's be reformers, but let's not be total masochists when it comes to our economy," Moscovici said.

Another French bank decides cuts are the only way

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Jan 21 (Reuters) - Credit Agricole is working on a cost-cutting plan of 150 million to 200 million euros ($199 million to $266 million) through 2015 at its corporate and investment banking unit, a union source said.

The bank's management recently briefed unions on the planned expense reductions, reassuring them that there wouldn't be any new job cuts after the bank laid off 1,750 staffers last year, the source said.

"The management told us there wouldn't be any layoff plan," the source said, "but that there were expenses to be cut between 150 and 200 million euros, by 2015."

The plan is the latest sign that big European banks are having to resort to further cost cuts to try to boost profits as investment banking revenues remain erratic and retail and consumer lending are depressed by weak economic growth.

Bank lobby preached to the converted in liquidity talks

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By Huw Jones and Lionel Laurent

LONDON/PARIS, Jan 21 (Reuters) - Lobbyists found themselves preaching to the converted: the European Central Bank and Bank of England needed little persuading in the end that new global liquidity rules for commercial banks needed loosening.

Central bankers realised they had to relent unless they wanted to remain cash machines for squeezed European lenders indefinitely, said sources close to negotiations on the rules.

Earlier this month, commercial banks got their way after a campaign whose subtlety contrasted to past aggressive and unsuccessful lobbying efforts.

Global regulators gave them four more years and greater flexibility to build up sufficient liquid reserves - those that can be sold quickly for cash even during crises - so that taxpayers would no longer have to fund rescues like in 2007-09.

"What helped the ECB and Bank of England rally to European banks' cause was the realisation that liquidity deficits were a central bank issue," said a banking source close to the talks.

"The change in their minds happened around the middle of last year," said the source, who declined to be named because he was not authorised to speak publicly about the talks.

BNP Paribas briefs staff on plan to cut costs

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By Lionel Laurent

PARIS, Jan 18 (Reuters) - French bank BNP Paribas plans to spend 1 billion euros ($1.3 billion) over three years to pare down its businesses in response to lackluster growth in Europe, according to a union source.

Analysts and investors expect France's largest bank to lay out its new strategy in the coming months after a rocky year spent selling assets and cutting jobs.

Banks across Europe are shrinking to boost defences against a weakening economy and comply with tougher global regulations.

Germany's Deutsche Bank and Switzerland's UBS have recently announced job cuts while Britain's Barclays is preparing a new strategic plan.

BNP and domestic rivals Societe Generale and Credit Agricole have so far focused their restructuring efforts on investment-bank activities hardest hit by the financial crisis, but are now expected to turn to activities like retail banking exposed to weak European growth.

BNP's management outlined the overhaul to staff representatives on Jan. 16 - promising to cut layers of management and simplify decision-making - but stopped short of any details on jobs or how much money would be saved, a source from the SNB union told Reuters.