Societe Generale SA is adapting to changes in market conditions and has tapped several alternative sources of dollars after U.S. money market funds scaled back their lending to European banks, a senior bank executive said Monday.
"Access to dollars through U.S. money market funds has been drying up over the last one and a half months for all European banks, and we are adapting and managing the situation," Severin Cabannes, Societe Generale deputy chief executive, said in an interview.
His comments came at the end of a bruising day for shares of the large French banks, with Societe Generale shedding 10.8%, as expectations that Moody's Investors Service Inc. would downgrade it this week added to worries about a deepening euro-zone crisis that has hammered the country's financial sector in the last month.
The French banks, in particular Societe Generale and its larger rival BNP Paribas SA, also have been hurt by a perception that they face difficulties in tapping short-term funding in the U.S., as money-market funds cut their exposure to the banks amid fears about potential contagion from the Greek and broader European sovereign debt crisis.
BNP Paribas last week sought to allay such concerns, saying it has substantial short-term euro funding and an excess of short-term dollar liquidity. Societe Generale issued a statement Monday outlining its own alternatives to dollar funding.
Cabannes said the bank has accelerated disposal of so-called legacy assets that were hived off during the financial crisis, and it has also reduced its market positions that require financing in dollars.
