Caisse d'Epargne and Banque Populaire, two French mutual banks, have pledged to inject $1.5bn into CIFG, a bond insurer, to enable it to weather the collapse of the subprime mortgage debt market.

It is the most striking subprime-related episode seen in France, which had been spared the dramas in Germany, where IKB and Sachsen LB had to be rescued after they failed to handle exposure to volatile credit markets.