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PARIS (

TheStreet

) --

BNP Paribas

, France's biggest bank by market value, has launched a rights issue of 4.3 billion euros ($6.27 billion) to help pay back the government's stake in the bank.

The French state funded the bank with capital of more than 5 billion euros during the financial crisis. Its stake in BNP Paribas is currently about 17%.

BNP Paribas said it will issue 107.6 million new shares and existing investors will be able to buy one new share for every 10 shares they already own at 40 euros a share, a 29% discount to the bank's closing stock price Monday.

BNP Paribas also said it would pay back interest of 226 million euros.

After the transaction, BNP Paribas said its Tier 1 ratio, a measure of financial strength, will be over 9%.

BNP Paribas, as well as France's

Societe Generale

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, received funding from the French government after lending dried up shortly after the failure of

Lehman Brothers

last September. SocGen said last week it would reimburse the French government but didn't provide a timetable.

Banking shares in Europe were higher, although markets overall in Europe were trending lower at 4:25 a.m. EDT.

-- Reported by Joseph Woelfel in New York

.

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