PF Archive

Les Miserables

22 02 2012

It has been a troublesome year for the French financial system. Standard & Poor’s decision to strip France of its cherished AAA credit rating at the start of 2012 was perhaps more symbolic than substantial, but it capped a problematic period for the country that involved dealing with the eurozone crisis, a fresh set of capital adequacy reforms in banking and a lethargic interbank lending market. The country’s largest commercial banks, which navigated the credit crunch relatively safely, have been the biggest losers. The most obvious impact of this weakness has been in jobs, with the big three French banks – Société Générale (SG), BNP Paribas and Crédit Agricole – cutting 1,800 corporate and investment banking positions (around 10% of staff in these divisions) between them in the last two months. But while staffing levels at such institutions are always volatile, the more seismic shift has been with the disposal of billions of dollars of structured finance debt. The sale of project finance portfolios is a more widespread phenomenon; Bank of Tokyo Mitsubishi UFJ (BTMU) spent £3.8 billion ($6.02 billion) on Royal Bank of Scotland’s project finance book, as well as some of its staff, in 2010 while last year Bank of Ireland offloaded its infrastructure project finance book to Sumitomo Mitsui Banking Corporation (SMBC) for Eu590 million ($778.1 million) and its energy book to GE Energy Financial Services. Some French lenders are having a better time. Natixis had less international exposure, began to ramp up overseas at the same...