As the global economic crisis deepens, France is facing major upheaval and challenges in its own financial sector. The merger of two of the country's biggest banks, to create the second biggest banking network in France, appears set to go ahead, and the retail divisions are happily showing a profit. But France is being hit by the same 'crise financière' that has swept the rest of the world, bringing its workers out onto the streets to protest and, in turn, undermining consumer confidence. What now for the republic's retail banks?
The shake-up of the banking sector through the proposed merger of the two mutual banks - Banque Fédérale des Banques Populaire's (BFBP) and Caisse Nationale des Caisses d'Epargne's (CNCE) - is due to be finalised later this year. In March, the senior executives of the two groups were given the go-ahead to negotiate the terms of the final deal. The negotiation agreement details the French state's equity contribution of about €5bn to the future central body of the merged group. This contribution comprises €3bn in preference shares that are convertible into ordinary shares under certain conditions, starting from the fifth anniversary of their date of issue, resulting in the state holding a maximum of 20% of the new central body's ordinary shares, and €2bn of undated super-subordinated notes.
