French transaction tax - FT.com The poor old French banks seem to be copping it from all sides these days. The latest swipe is from a financial transaction tax proposed in a pre-election announcement by President Nicolas Sarkozy. The 0.1 per cent levy will hit trades in Paris-listed shares, including high-frequency trading, and credit default swaps - but not bond trades. The unilateral proposal made shares in the three biggest French banks by assets - BNP Paribas, Crédit Agricole and Société Générale - fall by more than 6 per cent each on Monday. They rightly regained some ground on Tuesday because the original sell-off was ridiculously overdone. Details of the tax are sketchy. But assuming that the aggregate equities revenues of the three biggest banks for the first three quarters are annualised and then taxed at 0.1 per cent, Mr Sarkozy would bag a paltry €6m. If he really thinks the tax is going to bag €1bn, it certainly won't be coming from those institutions he seems so keen to punish. Its cost, rather, will be borne by voters such as savers and pensioners as asset managers and insurance companies pass on the cost of equities trading on Europe's second biggest exchange by value. The move is unlikely to cause trading to switch to London, where stamp duty of 0.5 per cent is levied on share trades, reaping the state £3bn a year. But new taxes always cause behaviour to change, as seen in the growth in contracts for difference in the UK. Investors always find a way around clumsy government meddling. French banks barely need new scare stories. They are caught in the sovereign debt crossfire between Greece and its paymasters, and are under pressure to deleverage sharply to meet the European Banking Authority capital requirement by June. Mr Sarkozy has given one more reason for France's leading banks to languish at hefty discounts to their tangible book values.