PARIS — Societe Generale SA (GLE.FR) Chief Executive Frederic Oudea said it was too early to set up a banking union in Europe aimed at protecting depositors and preventing failing banks from threatening the financial system.

In an interview being published in Saturday's edition of French daily Le Monde (original here; English translation here), Oudea said: "We can wish for better harmonization of rules and deeper integration of banking supervision in Europe in the long term, but to engage in such a process, which requires solidarity mechanisms within Europe, one needs first to accelerate political and economic integration."

He said that in any case, a banking union wouldn't resolve the crisis of confidence over sovereign debt.

The European Commission said in a report Wednesday on the currency union's crisis-fighting efforts that euro-zone countries should consider setting up a banking union that would allow them to share the burden of bank failures.

It said that allowing the euro zone's new rescue fund to directly inject capital into banks was one option to prevent bailouts from weighing on government finances.

Oudea stressed that everything must be done to keep Greece in the euro zone. "The contagion effect must not be ignored," he said.

He said that a proposal by the new French President, Francois Hollande, to increase the ceiling on state-regulated, tax-free savings accounts, known as Livret A, could deprive French companies of much needed funding.

"One needs to encourage French people to fund companies through shares or deposits that feed bank loans," said Oudea, who also serves as president of the French Banking Federation.

Asked about Hollande's plans to "separate the speculative sector from the credit sector," Oudea said market activities were "essential to fund the economy."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.