French bank Societe Generale has cut its funding line to local Greek unit Geniki and is studying possible exit strategies from the recession-wracked Greek economy, analysts who met with SocGen's Chief Financial Officer said.
French banks are the top foreign lenders to Greece and have been slashing their exposure over the past year via sales of sovereign debt and writedowns of their holdings in Greece.
While SocGen's exposure to Greece is at the low end of the French banks - especially compared with Credit Agricole , owner of Geniki's larger rival Emporiki - analysts quoted SocGen CFO Bertrand Badre as saying that the bank was "as busy as" Credit Agricole in looking for an exit strategy.
Credit Agricole said on Monday it was in talks to sell all or part of Emporiki, with Greece's biggest lender National Bank confirming it was part of the talks.
"It's clear SocGen is looking for an exit door," said one of the analysts who attended the meeting, Natixis' Alex Koagne, who added that Badre had also said that SocGen's funding line to Geniki had been cut to zero.
A spokeswoman for SocGen confirmed that funding to Geniki had been reduced "to a minimum" but played down the significance of Badre's reference to an exit strategy, saying the bank was "monitoring actively" Geniki in order to maintain its deposit base.
JPMorgan analysts wrote in a note that with the cut to funding lines, SocGen's remaining exposure to Geniki was 300 million euros of capital and subordinated debt. "The group could also be looking to sell Geniki, which should be easier given the smaller size of Geniki vs. Emporiki," they wrote.
Both Geniki and Emporiki have been granted access to the Greek central bank's emergency liquidity support scheme, allowing their parent banks to further reduce funding.
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