France

Hollande gets chance to forget 75 pct tax rate

31 Dec 2012

A French court has struck down the controversial 75 pct tax rate on incomes topping 1 million euros a year. The government could redraft the law, but the ruling provides a good opportunity to cease and desist. Sadly, politics could overrule what economics dictates.

Narrowing French-UK yield rings hollow for Hollande

20 Dec 2012

Yields on 10-year debt issued by the UK government may soon rise above those on French state bonds of the same maturity. But François Hollande has nothing to brag about: it is more the sign of a deteriorating UK economy than proof of investors’ confidence in Paris.

Goldman gets reward for taking year-end block risk

13 Dec 2012

Renault’s sale of its 6.5 pct stake in Volvo is a boon for the French carmaker. But it was hazardous for Goldman, which stood to wear as much as 1.5 bln euros in selling the block. Any loss would hurt just as the books are about to close for 2012. The upside? League-table credit.

Qatar gives SocGen an honourable exit from Egypt

13 Dec 2012

Qatar National Bank is buying the French lender’s 77 pct stake in its Egyptian unit, valuing the whole at $2.6 bln. The price of 2 times book value is below pre-revolution multiples, and SocGen faces currency risk. But with few other buyers, it’s better to shrink while it can.

EADS’ governance rejig falls short of true reform

6 Dec 2012

Paris and Berlin will reduce their influence over the aerospace group. Private shareholders Lagardere and Daimler will be free to divest their stakes. But EADS is still a long way from the kind of reform that would prevent unwarranted government meddling in its operations.

Logic won’t topple London from euro perch

3 Dec 2012

The French central bank governor wants euro trading to be done in the euro zone, not in offshore London. The argument is sound. But Christian Noyer should know that finance doesn’t work that way. After all, he is pushing Paris as an offshore currency market - and good luck to him.

Moody’s downgrade is good news for France

20 Nov 2012

The U.S. ratings agency has followed S&P in stripping France of its AAA status. The arguments are well known, and markets yawned. But the move will add to the pressure to plough ahead with reforms. It could even help François Hollande convince the French there’s no time to lose.

Hugo Dixon: Is Hollande more like Rajoy or Monti?

19 Nov 2012

In other words, is France’s president condemned to be always behind the curve with reform like Spain’s PM? Or can he get ahead of it like Italy’s PM? Hollande started off like Rajoy. But he is finally talking sense. What’s not clear is if he has the courage to keep it up.

BNP and SocGen smiling after Hollande U-turn

16 Nov 2012

Remember how France’s president promised a war on banks? Now his finance minister says Paris will only crack down on proprietary trading, leaving market-making untouched. This could undermine the Liikanen report’s call for market-making to be ring-fenced across the EU.

Europe’s automakers given bad steer by France

14 Nov 2012

Insistence by Paris that Peugeot protect jobs in return for a bailout has understandably given GM jitters about a closer alliance. Europe’s car industry won’t be solidly profitable until capacity and costs are cut through mergers. Governments should help, not hinder, the process.

Maybe Hollande gets it after all

14 Nov 2012

It took six months in the job, but the French president finally seems to grasp the country’s need for fundamental economic reform. He also accepts the hard truth that serious spending cuts are needed to clear up the fiscal mess. Now he must get ready for mighty political fights.

IPO may be better option for Vivendi’s Brazil unit

12 Nov 2012

The French company is courting top names to unload GVT. But Telecom Italia and Brazil’s Oi can’t afford the $9 bln price tag. And Brasilia could deny Carlos Slim’s America Movil a bigger role. With a full sale tough to achieve, returning GVT to the market may make sense.

Franco-Belgian Dexia headache isn’t quite over yet

8 Nov 2012

Paris and Brussels are pumping 5.5 bln euros into the ailing lender. Dexia always looked like it might need capital on top of the liquidity support agreed last year. But the funding guarantees are likely to be an ongoing burden, and it’s not certain further capital won’t be needed.

Activism will only get so far at Danone

7 Nov 2012

Nelson Peltz forced a demerger at Cadbury. Now the U.S. activist is reportedly targeting France’s leading consumer goods group. Danone’s de facto bid-proof status may partly explain its underperformance. A breakup would be a long shot. But management needs a kick all the same.

BNP needs to stay focused on regional strengths

7 Nov 2012

After scares last year, France’s largest lender is one of Europe’s best-capitalised banks. That gives it flexibility to nab investment banking market share from its weaker peers. But its vulnerability to the EU economy’s downturn is a reason to avoid grandiose expansion schemes.

Placid Hollande’s slow reform tempo is alarming

5 Nov 2012

A report commissioned by the French president suggests a shock treatment to lower labour costs and make the economy more competitive. But the government has already decided on a more leisurely pace. This politically cautious approach is economically calamitous.

Vivendi starts to take a T out of TMT

16 Oct 2012

The French group was built on the duff notion that telecoms, media and technology assets benefit from common ownership. Nowadays only bondholders agree - and boss Jean-Rene Fourtou seems willing to sell the telecom operations. But a slimmer Vivendi wouldn’t look more coherent.

EADS can’t move if it doesn’t change. But can it?

10 Oct 2012

The Airbus maker couldn’t do a deal with BAE because of its skewed, politicised governance. CEO Tom Enders may have been over-optimistic in thinking the Franco-German group was a normal company. He still has work to do to convince the French and German governments to step back.

BAE must show standalone strength post-EADS

10 Oct 2012

An “in play” BAE may attract a low-ball bid. So the UK defence group must reassure investors. But there are few levers to pull. It has been cost cutting for years. And with defence budgets still shrinking, showering shareholders with cash does not look too wise.

Uncle Sam lands well-timed Nobel Prize cameo role

9 Oct 2012

This year’s physics award went to a pair of quantum particle researchers who cast light on sub-atomic flip-flopping, which applies in a sense to the U.S. election. More seriously, with spending under scrutiny it’s notable that one of the winners works in a federally funded lab.