PARIS (Reuters) - French presidential hopeful Francois Hollande, under pressure to accommodate hardliners ahead of a Socialist Party primary vote, said on Thursday that banks should pay for reckless investment in Greece.
Hollande, who is favorite to win a primary election on October 16 and run for the Socialists in April's presidential election, toughened his stance toward the financial sector for the second time in less than 24 hours.
"These banks that lent to Greece must take the losses, as they were not careful," Hollande, who like runoff rival Martine Aubry, hopes to be the first left-wing president in 17 years, told Europe 1 radio.
France and its euro zone partners are struggling to contain a debt market crisis and produce credible plans to backstop banks rattled by investor fears that Greece could default on some of the huge debts contracted by Athens over the years.
Banks hold huge amounts of government debt, typically mostly from their own country, and after the 2007/08 financial crisis regulators often encouraged them to hold more sovereign bonds as they were regarded as highly liquid and risk-free.
Banks were also encouraged not to sell sovereign bonds when worries emerged, and Deutsche Bank's CEO said an obligation to retain Greek bonds had cost it 400 million euros this year.
The country's conservative President Nicolas Sarkozy, who is expected to announce later this year that he will seek re-election, consistently lags both Hollande and Aubry in surveys of voter intentions.
Valerie Pecresse, a budget minister and spokeswoman for Sarkozy's government, said on Monday that French banks were solid but that the financial market crisis was making life more difficult.
Governments should only be involved in bank recapitalization if private capital could not be secured, she added.
In a Wednesday night television duel with Aubry, Hollande ramped up the rhetoric, signaling that taxpayers should not be forced to pay the bill for the misadventures of the financial industry.
"Banks that made a profit will have to fund banks that make a loss," said Hollande, who is generally regarded as a moderate left-winger and somewhat less old-school Socialist than former labor minister Aubry.
Hollande finished first out of six contenders in the first round of the Socialist primary last Sunday, taking 39 percent of the vote to Aubry's 30 percent. Two opinion polls since then have pointed to a narrower lead.
Both finalists have been forced to contend with an unexpectedly large 17 percent score by Arnaud Montebourg, whose anti-globalization agenda has been catapulted to center-stage as the decider vote in the primary looms.
Montebourg, knocked out in the first round, did not plan to tell his supporters who to vote for in the second round, his spokesman Gerard Guibert said.
But he might make his personal choice between the runoff candidates known before Sunday, Guibert added.
(Reporting By Brian Love; Additional reporting from Steve Slater in London; Editing by Andrew Heavens)
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