Reuters reported that the Gulf state of Qatar is in talks with BNP Paribas on taking a possible stake in France's biggest listed bank. Qatar has also been holding similar talks with other French banks, which have seen their share prices halved over the summer on fears they are under capitalized and overleveraged in the face of the euro zone debt crisis.

A Mideast investment in French banks would have echoes of the peak of the financial crisis in 2008, when Qatar and Abu Dhabi bought stakes in British bank Barclays as part of a capital increase that helped the lender stay independent while rivals Royal Bank of Scotland and Lloyds ended up being part nationalized.

An investment from Qatar would be positive news for French banks after months of intense selling pressure forced BNP and SocGen to announce tens of billions of euros in asset sales to free up capital.

Investors and analysts have been increasingly speculating that the French government may be forced to step in to stop the rot, which has been exacerbated by fears that a sharp ramp up in US dollar money market funding may spill over into a broader European bank liquidity crunch.

(Sourced from www.reuters.com)