Credit Agricole will lend 1.9 billion euros ($2.34 billion) to French towns and provinces which face a shortage of funding since Franco-Belgian bank Dexia SA (DEXB.BT) stopped operating following financial troubles, Les Echos newspaper says, citing Credit Agricole executives.
Through its insurance unit, the third largest French bank by market capitalization will offer credits to French local authorities of cities and towns between 50,000 and 100,000 inhabitants with a 15-year maturity and a fixed rate slightly lower than 5%, the newspaper said, citing Olivier Gavalda, the head of Credit Agricole's regional units, and Jerome Grivet, the head of Credit Agricole's insurance unit.
No officials were immediately available for comment at Credit Agricole.
French local governments have seen financing dry up after French and Belgian governments started dismantling Dexia, which specialized in credit to local authorities for infrastructure projects. The credit squeeze for French municipalities, which generally don't tap the bond markets, also worsened as commercial banks slowed lending as they implemented tougher solvency rules imposed by governments.
State-owned Banque Postale last week announced it will start lending to local authorities.
Newspaper Web site: http://www.lesechos.fr
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(END) Dow Jones Newswires
June 26, 2012 02:28 ET (06:28 GMT)
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