Sarkozy pressures banks to increase credit

PARIS, Oct. 30 (UPI) -- The mandate to increase credit to customers built into the French government's financial bailout plan could be problematic for banks, a noted economist said.

Laurence Boone of Barclays Capital said the mandate to increase credit 3-4 percent a year "looks demanding" within the context of a declining economy, The Financial Times reported.

"We expect the economy to fall in 2009 by 0.5 per cent. In that context, the 3-4 per cent lending target looks demanding as corporate and consumer demand is likely to fall sharply," he said.

French President Nicolas Sarkozy has begun pressuring banks to comply with the directive meant to ensure some bailout funding gets into the hands of borrowers, the Times reported.

Sarkozy met with bank executive and government officials at the Elysee Palace Thursday to clarify details on the mandate, the Times said.

Frederic Oudea, chief executive officer of Societe Generale, was pressed for an answer on the topic during a radio interview this week: "How do you explain the fact that entrepreneurs say, 'I knocked on the door of my bank and they told me, no, we will not lend you money?'"

"The examples keep growing, there are lots of them," the interviewer said.