France

SocGen’s wholesale arm gets new boss for new times

22 Dec 2011

Didier Valet, the French bank’s CFO, is to run its investment bank. The group is cutting staff and assets in the division as it struggles to meet new capital and funding rules. Outgoing Michel Peretie had been tasked to grow the business. But the time has come for a numbers man.

Noyer’s ratings-rage is right for wrong reason

15 Dec 2011

The Bank of France chief is enraged by the prospective downgrade of his sovereign. The UK should get snipped first, he says. The fury is excessive, but not crazy. While Britain’s creditors may face a lower risk of nominal default, they’re in more danger of default-by-inflation.

France is serial loser in unfolding euro drama

12 Dec 2011

In spite of appearances, France has lost out to Germany on all the important arguments about how to manage the euro crisis. Nicolas Sarkozy’s theatrics have created diversions. But they can’t hide the fact that what Berlin wants, Berlin gets.

Sarkozy courts danger with ECB-bank-sovereign plan

9 Dec 2011

The French president says banks will use cheap ECB funds to pile into sovereign debt. That would be convenient for stressed governments, but tough on banks. And any hint of compulsion would scare investors. Still, political arm-twisting may make it hard for some banks to say no.

Clock is ticking on Veolia’s efforts at renewal

6 Dec 2011

The French utility has been hit hard by the economy and its own hubris. Chairman Antoine Frerot is trying to regain the initiative by selling 5 bln euros of assets and widening cost cuts. That’s sensible, but he needs results fast. Investors’ patience must be wearing thin.

France isn’t ready for recession

29 Nov 2011

The government’s budget is based on rosy forecasts and neither of the two leading presidential candidates is willing to speak of more austerity. But that is exactly what might be required if high government bond yields tip the euro zone into a full-blown recession in 2012.

France plays risky game with Dexia

23 Nov 2011

The French government is refusing to renegotiate the 90 bln euro deal to guarantee the stricken Franco-Belgian bank’s debts. With its triple-A rating under threat, this is understandable. But the hardball approach risks putting further pressure on Belgium’s sovereign yields.

France, Germany could agree on ECB’s euro role

22 Nov 2011

Berlin stands right behind the ECB’s reluctance to engage in quantitative easing. Better to let governments take care of reform and rescue. Paris has joined the chorus asking the bank to reconsider, but France isn’t on a collision course with Germany. It all comes down to timing.

French election could help propel reform

16 Nov 2011

The presidential contest could waste precious time – and scare investors – by unleashing rival populist proposals. But if Sarkozy and Hollande agreed that more growth is needed, the debate on the how best to reform the economy would be productive for the nation and the euro.

France fights a scary case of Italian flu

11 Nov 2011

The French bond market is starting to flash warning signals. The trauma of the Italian rout is partly to blame, but France’s own creditworthiness isn’t pristine either. If investors start to think of it as risky, the euro zone crisis will enter a whole new, dangerous phase.

SocGen dividend cut better than capital-raising

8 Nov 2011

The French lender is aiming to plug a third of its 3.3 billion euro capital deficit by scrapping its dividend. Investors may complain. But with SocGen shares down almost two-thirds since February, skipping a payout is better than the risk of dilution from an equity issue.

For France, fear is a powerful fiscal force

7 Nov 2011

The French government has opted for more fiscal tightening to meet deficit targets in spite of the slowing economy. It’s heavy on taxes and light on spending, but there wasn’t much of a short-term choice. A credit downgrade would signal the end of Sarkozy’s meagre re-election hopes.

Euro zone not yet ready for Greek game of chicken

3 Nov 2011

Merkel and Sarkozy have threatened to cut Greece loose if it doesn’t back the latest bailout plan. But Europe isn’t prepared to handle the backlash. With barely a month to get its act together and a history of dysfunctional decision-making, there’s a big risk of a mega crash.

France can’t afford major euro split with Germany

21 Oct 2011

Divisions over the euro zone’s bailout fund have delayed the much-ballyhooed Franco-German “grand plan”. Nicolas Sarkozy seems ready to compromise yet again to keep Angela Merkel on board. He knows the euro zone wouldn’t survive a major split between Paris and Berlin.

Sarkozy’s euro warning smacks of desperation

19 Oct 2011

As Moody’s says it might change its view on France’s triple-A ratings, the French leader warns gravely about the euro ahead of next week’s EU summit. But seven months before the presidential election, it’s his future he’s really talking about.

Air France-KLM will struggle to gain altitude

18 Oct 2011

The Franco-Dutch carrier is being squeezed on all sides. It has high costs, stiff competition and large debts. Market conditions are poor, too. Changes to the boardroom crew will help if they approach restructuring seriously. But investors are right to be sceptical.

French socialists tempted to move backwards

10 Oct 2011

Voters in the first round primary of France’s main opposition party gave former labour minister Martine Aubry a surprising strong second place behind centrist Francois Hollande. The party faithful may be tempted by her old-style ideology. That’s exactly what France doesn’t need.

Sarkozy’s short-termism driven by triple-A fears

10 Oct 2011

The French president’s stances on restructuring Dexia and recapitalising euro zone banks are driven by the obsessive fear of losing the nation’s top rating. The risk is that this might precipitate short-term fixes, which would make a downgrade even more likely.

France and Belgium can’t assume Dexia is a one-off

4 Oct 2011

State shareholders have pledged to ease the stricken bank’s liquidity problems by guaranteeing its debt. But shaky sovereigns have less firepower than they did in 2008, and other lenders may need similar help. Euro zone banks need a more comprehensive funding solution.

Dexia rescue would need more than just capital

3 Oct 2011

The Franco-Belgian bank’s shares have slumped amid fears it needs a second bailout in three years. Helping Dexia cope with a big haircut to its Greek debt is the first challenge. But any package also needs to tackle its reliance on short-term funding, and its unwieldy structure.