French Finance Minister Francois Baroin extended a short-selling ban on 10 financial stocks for three months.
The ban, in place since August, may be lifted sooner if market conditions permit, Baroin said today in an e-mailed statement. The restrictions cover securities of French lenders including Credit Agricole SA and Societe Generale SA.
France, Spain, Italy and Belgium introduced short-selling bans in August in a bid to stabilize markets after some European banks hit their lowest levels since the 2008 credit market contraction that followed the bankruptcy of Lehman Brothers Holdings Inc. Italy is yet to decide on whether it will extend its ban, which expires tomorrow. The country is in the grip of a political and financial crisis that has led to the resignation of Prime Minister Silvio Berlusconi.
“I would be shocked and amazed if Italy didn’t roll over their ban until at least the end of the year,” Darren Fox, a regulatory partner at Simmons & Simmons LLP in London, said in a telephone interview.
A spokesman for Consob, Italy’s securities market watchdog, declined to comment on whether it will extend its ban, which expires tomorrow.
“Banning short selling is a way to discourage speculative practices” on these securities, Baroin said. France’s Autorite des Marches Financiers decided on Nov. 3 that the “present conditions on the financial markets do not permit the lifting of this ban,” according to the statement.
The restrictions cover shares and equity derivatives in some financial firms. The Spanish and Belgian bans are indefinite.
The Bloomberg Europe Banks and Financial Services Index has fallen 11.7 percent since the French ban took effect on Aug. 12. Societe Generale SA has dropped 24.6 percent and Unicredit SpA has fallen 24.5 percent during the period.
Lawmakers in the European Parliament will vote next week on legislation that would curb so-called naked short-selling of stocks and government bonds and allow European Union-wide short-selling bans during crises.
Short-sellers sell borrowed shares with plans to buy them back later at a lower price, a practice politicians and some investors blame for roiling markets.
The French ban covers “the taking of net short positions and the increasing of existing net short positions,” the AMF said in a statement on its website. In addition to Credit Agricole and Societe Generale, other companies covered by the ban are April Group, AXA SA, BNP Paribas SA, CIC, CNP Assurances, Euler Hermes SA, Natixis, and Scor.