Paris: Societe Generale said it would cut costs and sell assets worth €4 billion to bolster capital on Monday, but shares in French banks fell by more than 10% on concerns about Greek debt and a possible cut to their credit ratings.

SocGen, BNP Paribas and Credit Agricole are heavily exposed to Greek government debt, which is under intense pressure amid worries about its euro zone membership.

French banks are braced for an imminent decision from credit rating agency Moody’s, which put them under review for possible downgrade on 15 June, several sources told Reuters on Saturday.

Confidence in European lenders’ ability to fund themselves in the face of a slowing economy and the unfolding Greek debt drama has evaporated rapidly, with French banks among the hardest hit because they are seen as particularly reliant on short-term funding.

SocGen’s announcement on Monday was intended to mitigate some of the negative pressure expected from a Moody’s downgrade, said one banking analyst speaking on condition of anonymity.

“Some points of the press release are really positive, but I do not think this is having an impact today," he said. “The share price reaction today is completely due to the downgrade from Moody’s and the jitters on Greece leaving the euro zone."

In a surprise move, SocGen said it would cut costs and jobs, speeding up the sale of toxic assets, as well as selling units in asset management and financial services.

The bank said it is still targeting a core tier-1 ratio “well above" 9% by 2013, without having to resort to a capital increase.

SocGen shares were down 9.3% at 02:27 pm, while BNP Paribas was down 11.2% and Credit Agricole was 9.9% lower. The European bank sector was down 3.3%.

SocGen, whose shares have been punished in recent weeks amid the deepening sovereign debt crisis in Europe, said it was accelerating a strategic plan announced in June 2010 to cope with new realities, in which funding would be scarcer and more expensive for all banks.

It had been under pressure to act after scrapping its 2012 profit target and a sharp summer sell-off driven by fears over its funding firepower.

French lenders -- two of which own local Greek banks -- have the highest overall bank exposure to Greece, according to the Bank of International Settlements, and have begun taking writedowns on Greek holdings as part of a new rescue package.

However, SocGen’s exposure to peripheral euro zone economies totals €4.3 billion ($5.9 billion), which amounts to less than 1% of its balance sheet.

Its exposure to Greek government bonds was €900 million on 9 September, down compared with June.

The fall in its shares has led investors and media to speculate about more dramatic moves, such as government intervention or a long-mooted takeover by rival BNP.

Asked about the government’s plans in a TV interview on Monday, French industry minister, Eric Besson, ruled out a partial nationalization of the banks.

“It seems to me to be totally premature and not relevant today to evoke this hypothesis," he told RMC and BFM TV.

Societe Generale CEO Frederic Oudea said that no discussions over possible state intervention had taken place.

And in an internal memo sent to staff, SocGen’s management said a takeover of the bank was not a solution to its current woes.

“A takeover, today, is neither a solution nor [at] risk [of occurring]: all banks have seen their share prices drop," the memo said.

“The level of instability in the environment and the banking system means that all banks are faced with the same problem. [A merger] is not a solution to the current problem, regardless of the players."

SocGen said freeing up €4 billion of capital by 2013 by selling assets would improve its core tier-1 ratio by 100 basis points. During a conference call the bank ruled out additional asset sales beyond €4 billion.

It also said it had already sold €3.5 billion in toxic assets in the third quarter as part of a broader effort to alleviate ongoing concerns over funding and liquidity.

On the cost cut front, SocGen is also cutting jobs in Russia, Romania, Poland and Egypt, as well as paring down the cost base at its investment banking business by 5%.