PARIS (Reuters) – France’s financial stability council will soon tighten its limits for bank exposure to highly-indebted French companies, it said on Tuesday.

The council, which is headed by the finance minister and includes the governor of the central bank, said in a statement it was wary of the risks posed by the rapid increase of interest rates on debt-laden groups.

As a result, the council confirmed its intent to ask France’s four systemic lenders — BNP Paribas SA, Societe Generale SA, Credit Agricole SA and BPCE — to set aside capital equivalent to 3% of their exposure to highly indebted French companies exceeding 5% of their equity.

A company is considered highly-indebted when its debt to EBITDA (earnings before interest, tax, depreciation and amortization) ratio exceeds six or is negative, the council said.

The council’s decision will be enforced in early August, it said.

(Reporting by Mathieu Rosemain and Leigh Thomas; editing by Jonathan Oatis)

FILE PHOTO: A view of a BNP Paribas bank building in Paris, February 24, 2023. REUTERS/Sarah Meyssonnier