Home Press room Press releases Financing the economy: French banks combine their efforts  

Press release  


Financing the economy: French banks combine their efforts

Banks are mobilised to help implement the French plan to support the financing of the economy. Working closely with the government, they have decided on a number of measures to increase their financing potential and ease lending conditions to consumers, SMEs and local administrations. The ultimate goal is to increase outstanding loans by 3-4%, while maintaining the high level of the banks' solvency.

I. Boosting their potential for financing the economy by issuing subordinated debt securities

To avoid seeing their lending capacity restricted while the capital markets are still not functioning normally, France's six largest banks will issue subordinated securities which can be included in Tier 1 capital in accordance with prudential standards in force. These issues shall be broken down as follows:

Financing the economy by issuing subordinated debt securities

The interest rates on these securities will depend on the market conditions specific to each institution. These are not equities and therefore no specific voting rights will be attached to them. This plan is based on an agreement in principle submitted to the European Commission for review and will be implemented only after validation.

These banks have a capital ratio that largely exceeds the regulatory standard. This ratio reveals first and foremost the quality of the assets held by the banks, in addition to the solidity of their business and the diversity of their activities.

It is important to note that the banks will borrow funds from the financing company that will have raised said funds on the markets with the government's backing; they will repay the loans with interest, plus an additional charge corresponding to the government guarantee. At the same time, they will be bringing high-quality assets to the financing company in exchange for its services.

II. Easing the financing of the economy

Having restored their cash holdings, the banks will be able to continue fulfilling their role of financing the economy. They will then undertake to provide a credit offering, particularly aimed at consumers and SMEs, which meets their expressed needs in a responsible manner.

> Commitments to SMEs

For French banks, providing funds to companies (and particularly SMEs) is a key component of economic development. Accordingly, they have made the following commitments to the public authorities, which met with their approval:

  • a monthly update on outstanding loans to SMEs, as well as the allocation of funds derived from LDD and LEP passbook accounts;
  • instigation of discussions at the national level with heads of companies, with the aim of identifying practices in bank/customer relations that need to be improved;
  • closer assistance provided to SMEs, and particularly the smallest of these companies, by adapting factoring services and distributing practical information;
  • an enhanced partnership with Oséo enabling problematic loan applications to be reconsidered in certain cases.

> Commitments on bridge loans

Credit institutions are announcing the implementation of a series of commitments aimed at helping their customers manage a bridge loan transaction under the best possible conditions given the current turnaround on the property market.

Although all banks are already seeking the most appropriate solutions with customers who may encounter difficulties with their bridge loans, French banks have decided, for the sake of efficiency, to step up their initiatives and to formalise collective undertakings based on the following principles:

  • improving customer information, prior to applying for a bridge loan, through a free informative document that can be downloaded at www.lesclesdelabanque.com; the document can also be provided to real estate professionals, which can then transmit it to their clients;
  • preventive monitoring of customers securing or having already secured a bridge loan;
  • seeking individual solutions to help customers currently struggling to unwind their bridge loans: revising the selling conditions on the property, reviewing appropriate solutions (extending the term of the loan, etc.).

Lastly, the banks have undertaken to establish ethical principles of governance, i.e. notably a ban on golden parachutes in the event of Management failure and an employment contract for corporate officers.


Colette Cova
email : ccova@fbf.fr
Tel : 01 48 00 50 07

Kenza Benqeddi
email : kbenqeddi@fbf.fr
Tel : 01 48 00 50 08

Top of the page