By Lionel Laurent and Steve Slater
PARIS, Sept 29 (Reuters) - The heads of top British andFrench banks Barclays, BNP Paribas and Societe Generale saidthey could meet tighter capital rules without a rights issue byusing their own profits.
But there is still uncertainty over the exact burden "BaselIII" rules will trigger if a systemic risk charge is imposed onbig banks, they told a conference on Wednesday, as well as overthe impact of tighter capital requirements on funding costs.
The main yardstick for Basel rules set to come into force by2019 is a Tier 1 capital ratio of 7 percent.
Many banks' Tier 1 ratios are already above this but theBasel III regime is much stricter on what can be counted as Tier1 capital, prompting fears of more rights issues in the sector.
"BNP is in a position to be above that 7 percentthreshold...without ever raising any capital," BNP ChiefExecutive Baudouin Prot told a Merrill Lynch-Bank of Americainvestment conference in London.
Societe Generale CEO Frederic Oudea and incoming BarclaysCEO Bob Diamond earlier told the conference their banks wouldalso be Basel-compliant thanks to retained earnings, althoughOudea did not explicitly rule out a rights issue.
Shares of SocGen were down 3.7 percent, the worst performerson a 0.4 percent weaker French blue-chip CAC 40 index.
Several traders had cited rumours on Tuesday that SocGen waspreparing a capital increase. The bank did not comment, whiletwo analysts dismissed the idea as unlikely.
Credit Suisse CEO Brady Dougan said the Swiss bank will beable to stick to its growth and dividend plans despite stricterglobal and domestic capital rules.
Despite confidence on meeting Basel requirements,quantifying the exact impact of Basel III is difficult becauseglobal regulators are still discussing extra proposals such as asystemic risk capital surcharge for large banks.
Barclays' Diamond said the new regime could add 150 billionpounds ($237.1 billion) to the bank's risk-weighted assets, with60 billion to assess market risk.
The broader effects of Basel include rising funding costs asbanks focus on generating returns on retained capital, arguedDiamond. SocGen's Oudea said Europe would likely move graduallytowards a more American model with lower levels of bank lendingand more capital markets borrowing.
BNP's Prot cast doubt over the American economy as well,however, by saying that future revenue and loan-loss provisiontrends in U.S. retail banking were "not 100 percent clear".
But he said that subsidiary BancWest was a core asset andthat the bank would continue to manage it, responding to aquestion on whether the unit might be sold.
When asked how the third quarter had shaped up after atricky second quarter, SocGen's Oudea said: "As you all know itis still a relatively low-volume-growth environment...(But Q3has) better trading conditions than in Q2."
A slump in capital markets activity in the second quarterdriven by sovereign euro debt fears hurt investment bankingprofits at many European lenders including larger rival BNPParibas.
Investors have also been wary of investment bankingactivities after Germany's Deutsche Bank said trading had beenweak over the summer months.
(Additional reporting by Julien Ponthus; Editing by James Reganand Michael Shields)