Credit Agricole: management is sending out Christmas vibes to its hard-up staff

(Full story)

PARIS, Dec 20 (Reuters) - French lender Credit Agricole has told staff representatives it will focus on cutting costs at its investment bank without a new layoffs plan, sources said.

Credit Agricole is seen as the weakest of France's listed banks in terms of capital strength and made deep cuts to investment bank staff and costs earlier this year.

Staff representatives say they have met with management twice this week over future strategy.

"There will be no new layoffs plan, the focus is on finding other cost savings over the next three years," a source who attended a meeting on Thursday said.

Inside David Lynch's Paris art-studio hideaway

(Full story)

By Lionel Laurent

PARIS | Tue Dec 11, 2012 1:05pm EST
 

(Reuters) - Behind the doors of a 19th-century printworks in south-central Paris, filmmaker and painter-by-training David Lynch takes a cigarette break after hours of etching abstract shapes and twisted limbs onto stone and wood.

Although best known for dark, surreal movies such as "Eraserhead", "Blue Velvet" and "Mulholland Drive", Lynch was an artist before he began filmmaking and since 2007 has been using the Idem workshop as his studio in Paris, creating some 170 lithographs and engravings.

As three workshop staff clamber onto one of the six giant mechanical presses to print up a fresh design, Lynch - dressed in a blue apron and sporting his trademark white, bouffant hairdo - explains that there is something uniquely inspiring about the Parisian printworks.

"This is totally Parisian. In people's dream of Paris, this place would fit in that dream perfectly," the 66-year-old tells Reuters, speaking above the noise of the whirling cogs and hand-operated cranks that he says remind him of the twisted, industrial world of his debut feature film "Eraserhead".

"Everybody that comes to this place, they feel it...I can feel the past. I can feel the whole art of life going on here."

Artists such as Picasso, Matisse, Chagall and Miro all had their prints produced at the site, a two-floor workshop built in 1880 that is still in use today by artists including Lynch. Encircled by piles of engraving-stones and the odd stuffed toy panther, the presses can also print from digital files.

Lynch's prints - which he says he etches from scratch after "catching" an idea in his mind - vary from Keith Haring-esque red-and-white squiggles and doodles to ghostly Edvard Munch-like humans stranded in desolate landscapes, with titles like "Things In Air Over City" or "Oh, A Bad Dream Comes".

They seem to combine the black-and-white, nightmarish imagery of "Eraserhead" and "The Elephant Man" with the abstract, surreal narratives of Lynch's last two movies, 2001's "Mulholland Drive" and 2006's "Inland Empire".

Lynch has explored other media over the past decade, creating a series of animated shorts posted online called "Dumbland", directing a Duran Duran concert streamed on YouTube and even recording his own solo album called "Crazy Clown Time".

He has even adapted his trademark palette of dark tones and surreal shapes to French tastes, designing a limited edition of Dom Perignon champagne bottles as well as an underground nightclub in the center of Paris called "Silencio".

Despite his obvious enthusiasm for trying out new things, Lynch's affection for Paris comes from its protection of tradition.

"I like the way the French people live. They protect the arts more than any other country," he says. "Here, almost every avenue of life is like an art form."

In a seemingly upside-down world where governments and bankers are suffering from the financial crisis but where big-name artists are fetching higher prices than ever before, Lynch says that he can still separate the urge to make money from the urge to make art.

"It's like Hollywood versus the art way," he says. "I love money for getting things to work and to live. But it's not the reason in my mind to make a film or to make anything."

Asked what his next move is going to be, Lynch says he will continue to work on music and art but adds that there is a movie idea also in the pipeline.

"Music and painting and maybe cinema, but we'll have to wait and see," he says. "Maybe it's going to happen but you need to be deeply in love and, you know...I'm falling in love."

Deals will come in 2013, honest...

(Full story)


By Lionel Laurent

CANNES, Dec 9 (Reuters) - A return to growth for the eurozone economy in mid-2013 and a likely waning of pessimism over the U.S fiscal cliff will bring a rebound in corporate deal-making, the head of French private-equity firm PAI Partners told Reuters.

Although PAI has recently struck several deals in the 500 million euros ($646.40 million) price bracket, Lionel Zinsou said in an interview on Sunday that the broader mergers and acquisitions market would recover only after a widespread return of confidence next year.

"The turning point for the European economy will be mid-2013...Bankers are making preparations for the end of the eurozone recession but the deals aren't there yet," Zinsou, a former Rothschild banker who has led PAI since 2009, said on the sidelines of a conference in Cannes.

Global M&A volumes have slumped so far this year, with big-ticket deals especially thin on the ground due to concerns about the eurozone debt crisis and a lack of agreement over the pending U.S. "fiscal cliff" - steep tax hikes and spending cuts set to kick in early next year.

Pointing to the current market pessimism as a good time to buy assets on the cheap, Zinsou added: "Once the worries over the U.S. fiscal cliff and other markets start to fade there will be a window of opportunity for sellers, I think, in the second quarter of 2013."

After a year of US cutbacks, French banks are testing the waters

(Full story)


By Lionel Laurent

PARIS, Dec 5 (Reuters) - France's top banks are taking advantage of calmer markets to return to expanding in the United States, a year after deep cuts to their investment banks saw them lose ground to rivals in the world's biggest financial market.

BNP Paribas, France's largest bank, and closest rival Societe Generale have hired several top U.S. bankers in recent months, signalling a selective return to growth in areas like private banking, fixed income, equity derivatives or mortgage securitisations, according to bankers.

No one expects the empire building of before the euro zone debt crisis. But things have changed since summer 2011, when a market panic forced French banks to slash staff and U.S. dollar lending to trade, shipping and aviation.

Fears of an imminent euro zone collapse have faded, allowing French banks to raise dollars at affordable rates. And the risk of a regulatory crackdown at home by Socialist President Francois Hollande has also waned.

"They (French banks) must be thinking: 'Okay, we're starting at square one again, we're in a position now to see where, if we grow things on a balanced basis, we can ramp up again,'" said Andrew Lim, bank analyst at Espirito Santo.

BNP and SocGen were among the most ambitious banks in their expansion during the years of easy credit, leaving them heavily exposed when the market turned. They have respectively hacked $60 billion and $50 billion from their U.S. funding needs in a deleveraging which could be over if markets remain stable.

While both are looking at other regions - Asia for BNP and eastern Europe for SocGen - they want to recoup ground in a U.S. market where economic growth is stronger than Europe and which accounts for over half of global investment banking revenue.

But the focus appears to be measured, targeted expansion.

"Five years ago we would have hired a team of ten, twenty people and really gone for it ... Today we're looking at a smaller number of possible hires and really seeing where we can add value," said a banking source at SocGen.

A first look at France's draft bank reform in detail

Following on from our Nov. 15 scoop, Reuters was the first international media to get hold of the draft law

(Full story)


By Lionel Laurent and Matthias Blamont

PARIS, Nov 28 (Reuters) - A soon-to-be-finalised French banking reform law will have a wider-than-expected scope as Francois Hollande's administration seeks to rein in several related sectors, according to a draft seen by Reuters.

Extra powers will be given to France's banking and capital-markets regulators to keep banks, brokerages, insurers and consumer-credit providers in line and to protect taxpayers from the cost of bailing out failed institutions, the document said.

It marks a flagship attempt by the administration of President Hollande to deliver on a campaign pledge to shake up the financial sector by separating speculative banking businesses from those deemed useful to the economy.

The reform holds back from curbing banks' market-making activities, as previously reported by Reuters, putting France at odds with tough proposals by the EU's Liikanen Commission for a broader ring-fencing of trading activities.

"The option chosen by the French government is to not entirely separate activities," said a source close to the situation. "France wants to pave the way in Europe."

The centrepiece of the reform demands banks like BNP Paribas and Societe Generale put their proprietary trading activities and financing for certain types of hedge funds and private equity into separately regulated entities, according to the draft law due to be unveiled in December.

These entities will be banned from high-frequency or commodity-derivatives trading. Client-related activities like market-making, hedging and other investment services will be spared, as will banks' own investment and cash-management operations, keeping them with the parent group.

Split up French banks? Not gonna happen under President Hollande, our sources say

(Full story)

By Lionel Laurent and Matthias Blamont

PARIS | Thu Nov 15, 2012 2:02am EST
 

(Reuters) - France is expected to reject tough rules proposed by Europe to curb the riskier activities of banks, after months of lobbying by the industry.

The draft rules to be unveiled next month will focus on banks' proprietary, high-frequency and algorithmic trading, sparing market-making - the buying and selling of securities on behalf of clients, according to two sources briefed on the government's position.

"Market-making is not being considered as a risky or speculative activity," one of the sources said.

French President Francois Hollande is therefore steering towards rejecting a call by the European Union's Liikanen Commission last month for most market-making and trading activities to be ring-fenced from mainstream business.

Banks like BNP Paribas and Societe Generale have been lobbying against any restrictions that could give foreign rivals such as those in the U.S. an advantage. Talks between banks and government officials ended this week.

Banks are concerned that the rules will add costs and complexity at a time when the industry is only just recovering from a year-long drive to restore investor confidence by selling assets and cutting staff.

"We are convinced that (market-making) is something which is a solid economic client-related activity...In our mind, what is speculative is very limited," BNP Chief Financial Officer Lars Machenil told analysts earlier this month.

Don't expect "miracles" in the eurozone next year, SocGen CEO tells us

(Full story)

PARIS, Nov 8 (Reuters) - Societe Generale expects economic growth to be sluggish in 2013, making it difficult to give accurate forecasts for next year, the French bank's chief executive told Reuters Insider television.

"Economic growth should remain sluggish overall (in 2013), with a key uncertainty in the U.S. - the fiscal cliff - in the beginning of the year," Frederic Oudea said in an interview.

"In the euro zone, we can't expect miracles."

French retail banks are set for a wake-up call - it's time to close branches and cut costs

(Full story)

By Lionel Laurent and Matthias Blamont

PARIS, Nov 1 (Reuters) - French banks' nationwide networks of branches are coming under scrutiny as ripe for cost cuts, ahead of the lenders' quarterly results due next week.

Investors will also be looking closely at fixed-income revenues from investment banking and whether any of the big French lenders will try to grab market share from Swiss rival UBS's worldwide retreat from this business.

French retail banks have packed a powerful profits punch over the past two years - buoyed by fee income on savings products, a boom in mortgage lending and archaic interbank levies.

But a slowing economy, tougher regulations and low interest rates have slowed or even halted revenue growth, putting pressure on banks to cut costs in a bid to boost profit.

This is a Europe-wide trend but one that matters especially for heavyweight French banks like BNP, Societe Generale and Credit Agricole, which have relied on their domestic retail business to offset the impact of roller-coaster financial markets on their investment banks.

French retail banking accounted for 17 percent of BNP's total revenue, 32 percent of SocGen's and half of Credit Agricole's in the second quarter.

"The outlook for revenue growth is looking a lot tougher these days," one French retail-bank executive said. "I don't know how revenues will grow given the crisis, incoming Basel III regulations, falling fee income and falling interest rates."

Another put it more bluntly: "Our fee income is dropping all the time. Every time we think it can't fall any further, it does," he said. "We're going to have to cut costs."

The Libor inquiry isn't over

(Full story)

By Lionel Laurent and Matthias Blamont

PARIS, Oct 26 (Reuters) - Societe Generale, France's second-biggest listed bank, has received a new request for information from U.S. authorities investigating the Libor rate-fixing scandal, a banking source told Reuters on Friday.

SocGen has already said publicly it is cooperating with probes into whether banks manipulated the Libor rate - the benchmark for $300 trillion of contracts and loans across the world - and is conducting its own internal inquiry.

"The request is not a subpoena to appear in a court but a request for more information from U.S. regulators," the source said.

SocGen declined to comment. Chief Executive Frederic Oudea reiterated last month that the bank had not received any allegation or charge linked to the probe.

Second time unlucky for the most indebted trader in the world

(Full story)

By Lionel Laurent and Thierry Lévêque

PARIS, Oct 24 (Reuters) - Former Societe Generale trader Jerome Kerviel lost his appeal on Wednesday against a three-year prison sentence for his role in France's biggest rogue-trading scandal.

A Paris appeals court ruled that the 35-year-old ex-trader, who had fought to overturn a 2010 conviction for taking huge, risky bets that cost SocGen 4.9 billion euros ($6.35 billion), was responsible

It said he must also repay the bank the billions lost, potentially a life-time claim on part of his earnings.

"Jerome Kerviel was the sole creator, inventor and user of a fraudulent system that caused these damages to Societe Generale," the court said in its ruling.

A nervous-looking Kerviel, who chewed his nails as he heard the verdict, was not forced to go to jail immediately. A separate judge will decide the precise terms of his sentence and how many hours he spends behind bars every day - a process that lawyers say could take weeks.

In all, Kerviel's sentence is for five years in jail, two of which are suspended.

The ruling is a victory for SocGen, which has spent years trying to shake off the scandal after it hit headlines around the world at the dawn of the 2008 financial crisis.

It also comes as the financial industry battles lawsuits over crisis-era behaviour and public perception it is too risky.

Kerviel's lawyer, David Koubbi, said he was examining the possibility of calling on France's highest court of appeal, the Cour de Cassation, to rule on the legality of the rulings.

"We had given ourselves the goal of defending Mr. Kerviel against an absolutely appalling injustice. I can tell you that we've failed," Koubbi told journalists outside the court.

Kerviel's chances of walking free aren't looking good

(Full story)

By Lionel Laurent

PARIS, Oct 22 (Reuters) - Jerome Kerviel, the man behind France's biggest rogue-trading scandal, finds out this week whether he is heading to prison or walking free after his last court appeal in a four-year battle against former employer Societe Generale.

Former trader Kerviel submitted a final attempt in June to be acquitted and avoid a three-year jail sentence handed down in 2010 for his role in taking huge, risky bets that cost SocGen 4.9 billion euros ($6.4 billion) to unwind and slammed the French bank's reputation.

Wednesday's verdict, barring unexpected legal challenges, will be the final say on a case during which Kerviel, who has kept an impassive front throughout, built a cult following.

While Kerviel has never denied masking the 50 billion euro positions that made headlines around the world as the financial crisis unfolded in early 2008, he has always said his bosses knew what he was doing - which SocGen denies.

The outcome will be closely watched by a financial industry facing other lawsuits over crisis-era behaviour. A similar trial is unfolding in London over the role of trader Kweku Adoboli in a $2.3 billion loss at UBS.

"These appear to be spectacular cases by virtue of the size of the risks taken by these traders and the danger that they put their banks in," said Emmanuel Moyne, a litigation lawyer at Linklaters in Paris.

"But if you compare it to cases where the amounts involved were much smaller, it is no different to people who simply cheated an internal controls system."

Taxman cuts French banks' Greek bill by 2 bln eur

(Full story)


By Lionel Laurent

PARIS, Oct 19 (Reuters) - French banks Credit Agricole and Societe Generale have collectively spent billions of euros sealing their exit from debt-ravaged Greece, injecting capital and sweetening terms for buyers to take businesses off their hands.
Thanks to the French taxman, however, they have managed to recoup 2 billion euros ($2.6 billion) from the total bill.
French tax law - which has since been changed - allowed the banks to deduct taxes on capital injected into their ailing Greek units, analysts said, cushioning their bottom line from the maximum amount of pain after pre-crisis investments in Greece turned sour with the euro zone's debt drama.
Credit Agricole's chief financial officer told analysts on a conference call the bank was able to deduct 1.6 billion euros from the 3.2 billion equity loss of selling its Emporiki unit to Alpha Bank, leaving a net loss of 2 billion euros once other costs were added.
SocGen did not disclose the amount deducted but two analysts reached by Reuters estimated the savings would have been around 300 million euros.
A SocGen spokeswoman said taxes were "among several reasons" that explained the gap between the bank's outlay of 444 million euros to sell Geniki to Piraeus Bank and its net-loss impact of 100 million. She declined any further comment.
"It was a good time to get out of Greece," one of the analysts said.

Paintbrushes at dawn: Art-world power dealers go toe-to-toe in Paris

(Full story)

By Lionel Laurent

PARIS | Mon Oct 15, 2012 6:16pm EDT

(Reuters) - A white horse quietly munches hay in the corner of a new warehouse-sized art gallery in the Paris suburb of Pantin, an oblivious player in a giant exhibit featuring mud-and-rust-colored paintings, creepy embryo sculptures and a black-and-white projection of an artist reciting Goethe.

Welcome to the world of the mega-gallery, a larger-than-life testament to the booming power of the $1.2 billion contemporary art market and the latest battleground for flamboyant art-dealer players and their increasingly valuable big-name artists.

While the French capital tends to be seen as a sleepy second fiddle to London in terms of market share, today it is staging the latest round of the fight for collector cash as two rival mega-spaces open just days apart with works by the same artist.

In one corner, Austrian-born dealer Thaddaeus Ropac, whose new gallery in Pantin is a 2,000 square-meter space housing a horse, its hay bale and a series of gloomy works by cerebral German artist Anselm Kiefer including doll-sized dresses skewered by branches.

In the other, world-famous American dealer Larry Gagosian - who earned a name-check from rapper Jay-Z on the "Watch The Throne" album - has opened a huge, new gallery at Le Bourget Airport, on the outskirts of Paris, again with work by Kiefer.

Kiefer's purpose-built sculpture of a crushed, caged field of wheat - inspired by a secret U.S. plan during World War Two to turn Germany into a pastoral, humbled land - fills up the entire hangar housing the airport gallery, which is seen as obvious bait for deep-pocketed art buyers from abroad.

"These galleries are a symbol of the business and marketing of art...It's a war machine," said Laurence Dreyfus, art advisor and curator of the 'Chambres A Part' exhibit at France's flagship FIAC contemporary art fair.

French mayors say 'no way' to repaying banks

(Full story)

By Lionel Laurent
PARIS, France, Oct 12 (Reuters) - French towns that say they were tricked into taking out risky loans from rescued lender Dexia are refusing to repay them in full and are asking President Francois Hollande for a bailout.

Franco-Belgian municipal bank Dexia was propped up with billions of euros of public money last October, when it become the first banking victim of Europe's debt crisis after its strategy of using short-term borrowing scheme to finance long-term lending came unstuck.

Those loans included an estimated 13 billion euros of risky structured products that went sour after the 2008 financial crisis, saddling thousands of French towns with crippling interest rates.

Frustrated by what they perceive as government inaction over the mounting repayments, mayors in a handful of the towns are tearing up their contracts rather than pay the state-rescued bank with money raised from tax hikes or spending cuts.

"I was not elected to raise taxes and to have those taxes go directly into banks," said Xavier-Martin Le Chevalier, mayor of the northwestern coastal town of Tregastel. "Directly or indirectly, the state will end up having to pay the bill."

Remember mortgage-backed securities? France does.

(Full story)

PARIS | Thu Oct 11, 2012 6:22pm BST

Oct 11 (Reuters) - French mortgage lender Credit Foncier is to kicks off a securitisation programme that will see it sell around 1 billion euros ($1.29 billion) in mortgage debt in the coming weeks, the bank's chief told Reuters on Thursday.
The move comes as Europe's banks seek to cut their balance sheets in the face of tougher regulation and a sputtering economy. It could be a sign of confidence for a French market mortgage-backed securities market which has been slow to recover from the 2008 financial crisis.
"We will very soon launch a first securitisation programme of mortgage bonds...We are working on an initial size of around 1 billion euros," Credit Foncier CEO Bruno Deletre said in an interview, adding insurers and other funds had shown interest.

(Reporting by Lionel Laurent and Matthias Blamont)

French central bank secretly propped up buckling lender

(Full story) (exclusive to Reuters)


By Lionel Laurent

PARIS, Oct 4 (Reuters) - French mortgage bank Credit Immobilier de France (CIF) was benefiting from emergency Bank of France funding to keep it afloat months before a high-profile government rescue, banking sources told Reuters.

The news comes ahead of negotiations between France and European Union regulators on the fate of the bank and its 2,500 staff.

It shows how actively the Bank of France was working behind the scenes to prevent a crisis of confidence hitting the banking sector of the euro zone's second-largest economy.

In a controversial move that jarred with campaign rhetoric of a crack-down on excess risk-taking in the financial sector, French President Francois Hollande agreed last month to guarantee the bank's debt after rating downgrades starved it of funding.

Yet according to one source with direct knowledge of the matter, more than 2 billion euros ($2.6 billion) in emergency funds had been lent by then to CIF via the Bank of France, implying the lender had been struggling to raise money.

"When CIF ran into problems earlier this year it was forced to use the (central-bank) system," one source with direct knowledge of the matter told Reuters. "The exact number is unclear but it was more than 2 billion euros."

Trader job cull continues as banks offload brokers

(Full story)


Oct 1 (Reuters) - French brokerage Cheuvreux is likely to cut hundreds of jobs as part of Credit Agricole's sale of the unit to rival Kepler, according to two sources familiar with the matter, the latest in a wave of job cuts to hit equity trading firms.

Credit Agricole said in July it was in exclusive talks to sell Cheuvreux, which employs about 700 people worldwide, to independent financial services group Kepler Capital Markets.

"We've been given pretty strong signals that around 350 to 380 jobs are to be cut at Cheuvreux," a union source told Reuters. "We've met with Credit Agricole CIB, they are indicating that this will be the scale of cuts that will hit staff."

(Reporting by Lionel Laurent, Christian Plumb and Astrid Wendlandt)

Euro fears keep company purse-holders wary

(Full story)

By Lionel Laurent

MONACO | Thu Sep 27, 2012 8:28am EDT

(Reuters) - Every 15 days, top executives at Greek food company Vivartia gather to gauge how well-prepared they are in the event that Greece succumbs to its debts and crashes out of the euro zone.

The executive team, conceived around a year ago at a time of mounting public anger over painful austerity measures enforced by Greece's international lenders, examines doomsday scenarios such as a return to a nationwide barter economy, an Internet blackout, a bank run and a freeze on supplies.

They are the kind of events that would send shockwaves throughout the world and Vivartia's executives are not alone in trying to prepare for the worst.


Such contingency planning may sound extreme in the light of recent European Central Bank pledges to roll out extra monetary firepower to help keep the euro intact, but company treasurers and cash managers are showing little sign of relaxing when it comes to the euro's future.

"There is always more you can do," said Vivartia Treasurer Marianna Polykrati, on the sidelines of a conference in Monaco.

Bank bailout may cost President Hollande

(Full story)

By Lionel Laurent and Leigh Thomas

PARIS (Reuters) - A state lifeline to wind down a small, ailing French mortgage lender is likely to carry a political price for President Francois Hollande as he grapples with rising unemployment and economic slowdown, even though there is no immediate budget hit.

The government promised over the weekend to guarantee Credit Immobilier de France's debt, putting an end to the bank's vain search for a buyer after credit rating downgrades drove it into a funding wall.

Unlike Franco-Belgian bank Dexia, which was also rescued with guarantees in the wake of the eurozone debt crisis, CIF is profitable and can be wound down gradually without requiring an injection of taxpayer money, bankers said Monday.

But the bailout risks giving voters the impression that the Socialist president is going soft on the financial sector after promising during his election campaign to crack down on the industry for perceived excessive risk-taking and lavish bonuses.

The daily Le Monde highlighted the irony with a cartoon showing Hollande rescuing a drowning CIF banker while recalling his campaign mantra that "my adversary is the world of finance ... but I don't like seeing people suffer".

Surprise surprise: biz leaders unhappy with French prez

(Full story)

By Lionel Laurent

JOUY-EN-JOSAS, France (Reuters) - French business leaders stepped up criticism of the new left-wing government on Friday, lamenting a perceived anti-corporate bias and lack of competitiveness, despite the prime minister's recent efforts to mollify them.

The presidency of Socialist Francois Hollande, who has angered some in the corporate world for adopting what they say are "soak-the-rich" tax policies and anti-business rhetoric, came in for heavy scorn on the last day of the Medef business lobby's annual conference.

As well as introducing a 75 percent tax on millionaires, the Hollande administration is eyeing more taxes on banks and energy companies and has pledged to crack down on risky investment banking.

"We are sick and tired of being told how to behave," Sodexo Chairman Pierre Bellon told Industry Minister Arnaud Montebourg, who was sitting on the same debate panel at the conference.

Slimmed-down banks get real with towering offices

(Full story)

By Tom Bill, Lionel Laurent and Christian Plumb


Aug 22 (Reuters) - In summer 2007, French bank Societe Generale drew up plans for a stylish glass building to house 3,500 traders at the foot of its twin-tower headquarters in La Defense, the business district of west Paris.

The five-storey block of trading floors, each the size of half a soccer pitch, will open its doors later this year, but the bank will struggle to fill the 250 million euro ($309 million) structure since the intervening financial crisis forced it to cut 880 jobs in France.

"It's been such a saga," said one SocGen trader who is destined to move in. "We've been told that we may end up simply having to rent it out, or put in a gym if we can't fill it."

London Calling For Tax-Soaked French Bankers

(Full story)

You can also see my interview with euronews below, entitled "French bankers ready to bolt?"

(Reuters) - The City of London financial district, though diminished by scandals and job cuts, is proving irresistible to fed-up Parisian bankers fleeing France's rising taxes and the feeling that they're not best loved at home.

French financial groups big and small, from advisory firms and private equity houses to big banks like Societe Generale (SOGN.PA), are looking at London as a possible shelter from a new 75 percent tax rate on top French earners, bankers say.

SocGen fires starting gun on asset sales

(Full story)

By Lionel Laurent

PARIS | Fri Aug 10, 2012 7:45am EDT

Aug 10 (Reuters) - Societe Generale's sale of its stake in asset manager TCW was a welcome move as the French bank plays catch-up with peers further ahead in their capital-raising efforts during the euro zone crisis, but the disposal was only a first step.

The question now is whether France's No. 2 listed bank will be able to sell other, non-U.S. units over the coming year at acceptable prices, potentially getting a capital boost that would lift investor confidence, analysts said on Friday.

"Societe Generale could still sell its custody business, or potentially its insurance unit, or its consumer-credit division in Italy," Natixis analyst Alex Koagne said.
"But as long as there is no appetite for euro-denominated assets it is going to be tricky."

What do women want? Handbag insurance and a handyman hotline, obviously.

(Full story)

This story is definitely the only time I have inspired a petition - in this case, to get a French bank to stop selling a product. Toxic debt? Predatory lending? Not at all, rather just a pink card with some extra offers targeting women...

By Lionel Laurent

PARIS | Thu Aug 9, 2012 12:01pm BST

(Reuters) - What does every woman want? One French bank thinks it knows the answer: Handbag insurance and a handyman hotline.

The pink-and-gold-coloured "Pour Elle" bank card, part of a cut-price summer offer by Paris-based lender Societe Generale, promises to "simplify" women's lives with up to 200 euros ($250) of handbag theft insurance and a dedicated hotline for up to two electrician, locksmith or other handyman callouts per year.

As useful as these products might be, not all women are happy to be singled out by their bank as needing special help.

"It's a little cheeky to promote both at the same time as 'female crises' that could arise," said Lys-Aelia Hart, a 24-year-old assistant art buyer living in Paris. "In my eyes, many men don't know how to deal with a serious electrical issue - on the contrary, they'd probably get killed."

Paris traders brace for new transactions tax

(Full story)

By Lionel Laurent

(Reuters) - French traders hoping for a summer break from the eurozone crisis are instead likely to be grappling with the fine print of a new tax on financial transactions, due to come into force on Wednesday.

Critics say the levy - which charges 0.2 percent on purchases of any securities issued by more than 100 top French companies - will add to brokers' woes. It comes at a time of high stock-market volatility, eroding brokerage margins and growing bets on an impending French stock-market slide.

The legislation also includes taxes on high-speed trading and the purchase of contracts that insure against a European Union sovereign-debt default, a package that politicians say will raise at least 1.6 billion euros ($1.96 billion) in a full year but which detractors say will hurt earnings and investment.

"The worst-case scenario is that the tax will encourage businesses to invest elsewhere at the expense of Paris as a financial centre," said Yannick Naud, portfolio manager at Glendevon King Asset Management

SocGen staff reps approve sale of TCW -sources

(Full story) (exclusive to Reuters and the first acknowledgment inside SocGen that the deal was on)


By Lionel Laurent

PARIS, July 27 (Reuters) - French bank Societe Generale's labor unions have signed off on the sale of its Los Angeles-based asset management arm TCW, two union sources told Reuters on Friday.

The deal is at a very advanced stage and will be signed in the coming days, they said. The name of the acquirer and the price of the transaction were not disclosed at the meeting.

"The works council has met ... It is decided that we are selling TCW," said one of the sources who attended the meeting.

Hedge funds pin hopes on French revolution

(Full story)

By Lionel Laurent

PARIS | Tue Jul 10, 2012 10:36am EDT

(Reuters) - France's small band of hedge fund managers, long dismissed as risk-addicted buccaneers in their home market, are betting on a renaissance as investors burned by stocks and sovereign debt look elsewhere for returns.

It is a Europe-wide trend but one that matters in France, where big investors such as insurers and retirement funds - holding 2 trillion euros ($2.5 trillion) assets - are more risk-averse and put less into hedge funds than peers abroad.

The optimism of some hedge fund managers is even trumping fears for the future of French finance under Socialist President Francois Hollande, who has pledged to tax top earners more and crack down on risky trading.

"More French assets are going to go to the hedge funds. It is inevitable," said Amit Shabi, co-founder of Bernheim Dreyfus, a fund that makes bets on whether mergers succeed or fail. "The only question is how long it takes. It may be one year or five."

Jerome Kerviel in last-ditch plea for acquittal

(Full story)


By Lionel Laurent
PARIS, June 28 (Reuters) - Former Societe Generale trader Jerome Kerviel made a last-ditch plea to clear his name before a Paris court on Thursday, capping his month-long appeal of a three-year jail sentence for his role in France's biggest rogue-trading scandal.

Addressing the crowded, hot courtroom after his lawyer's closing arguments, Kerviel said his name had been dragged through the mud from the day SocGen revealed in 2008 it had lost 4.9 billion euros ($6.09 billion) unwinding his huge, risky bets.

"I've lost four years of my life," the 35-year-old former trader said in hushed tones. Dressed in a pink shirt and navy suit, he looked physically weak and had to leave the courtroom several times on account of the heat during Thursday's hearing.

Kerviel has never denied masking the huge 50-billion-euro positions that tore a hole through SocGen's balance sheet and reputation at the dawn of the financial crisis. However, he has always insisted his superiors knew what he was doing and reiterated on Thursday he had "never lied" to the court.

"I was part of a system gone mad," he told the presiding judge, and offered his apologies to SocGen's employees.

Investors wary of SocGen's toxic loan swamp

(Full post)

By Lionel Laurent

PARIS, June 25 | Mon Jun 25, 2012 3:59pm BST

(Reuters) - Societe Generale's long-running battle to cleanse its balance sheet of toxic assets left over from the 2008 financial crisis i s putting investors on their guard.

They worry the sense of urgency in dealing with the problem is fading at a time when economic growth is flatlining across the euro zone, which is being reflected in SocGen's poor stock-market valuation relative to other European banks.

"(SocGen) is trying to cut its stock of illiquid assets but you can tell it's tricky," said Yohan Salleron, a fund manager at Mandarine Gestion, which has around 1.5 billion euros ($1.88 billion) under management.
"We prefer (domestic rival) BNP Paribas."

French banks to keep running from Greece despite vote

(Full story)

By Lionel Laurent

PARIS, June 18 | Mon Jun 18, 2012 7:59pm IST

(Reuters) - French banks, the top foreign lenders to Greece, are expected to continue their quiet retreat from the debt-wracked country after Greek voters gave a slim majority to parties supporting the international bailout that keeps it afloat.

The conservative New Democracy party beat the field in Sunday's election, pushing into second place the anti-bailout leftist SYRIZA party, and calming the nerves of those who believed a SYRIZA victory would have led to Greece's exit from the euro zone and financial chaos across the continent.

But with the euro zone debt problems unresolved and Greece's political and financial stability far from assured, industry insiders and analysts say French banks will probably keep shifting assets out of the country, cutting funding ties to local units and writing down the value of Greek holdings to draw a line under years of losses.

French lenders including Credit Agricole and Societe Generale held an estimated cross-border Greek exposure of $44 billion at end-December, according to Bank for International Settlements data, putting them most at risk of a sudden, messy Greek exit from the currency union.

Greece is still in the fifth year of recession and carrying debt equivalent to about 160 percent of GDP, and if it can cobble together a ruling coalition, faces years of austerity before a return to growth, but at least the doomsday scenario has been averted for now.

"This gives banks a bit of headroom, a bit of space to try to find a lasting solution to the Greek issue," said a French banking source, adding that there was nothing in the election result that would change the strategy of cutting back on Greek exposure. "There is a structural problem in the Greek market that has to be resolved. The alternative would be to accept regular losses in the hundreds of millions of euros."

For French banks, breaking up is hard to plan

(Full story)

By Lionel Laurent

PARIS | Fri Jun 8, 2012 1:27pm BST

(Reuters) - French banks are hoping for the best while planning for the worst.
The country's top lenders are exploring a variety of options ahead of expected moves by new President Francois Hollande to split up their operations.


Ring-fencing banks' risk-taking businesses from mainstream retail functions was a key plank of Hollande's election campaign, which also promised to hit lenders with more taxes and tighter regulation.

In response, the banks are mounting a rearguard lobbying action to limit what could be the hefty costs of potential legislation.

With the support of their regulator and the French Treasury, lenders have defended the "universal bank" model under which a bank sells everything from unglamorous household loans to complex derivatives.

The banks regard this model as less prone to failure than pure-play businesses like Northern Rock or Lehman Brothers.

But at the same time, bankers and industry sources say, lenders including BNP Paribas and Societe Generale are testing a range of scenarios, from ring-fencing retail banking units on the lines of the UK's Vickers Reform to more specific limits on trading and investing like those set out in the U.S. Volcker Rule.

"The banks are all lobbying hard to limit the fallout," said a person familiar with the matter. "Ultimately with this kind of debate it ends up boiling down to terminology - what is 'risky', what isn't - and the final product ends up not changing much."

French banks draw up Greek exit plans, sources say

(Full story) (Exclusive to Reuters)

By Lionel Laurent and Christian Plumb

PARIS | Fri May 25, 2012 4:12pm BST

(Reuters) - French banks, which are among the lenders most exposed to Greece, have stepped up their efforts on contingency plans for the debt-laden country leaving the euro zone, sources familiar with the situation said.

The heightened preparations by banks, including Credit Agricole (CAGR.PA), BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA), come after euro zone sources told Reuters earlier this week that each member of the common currency would have to prepare a plan for a possible Greek exit.


"Every bank has a task force right now looking at the potential consequences of a return to the drachma," a Paris-based banker said.

At end-Dec 2011, total French cross-border lending to Greece was $44.4 billion (28.3 billion pounds), higher than Germany's $13.4 billion, according to preliminary Bank for International Settlements data tracking consolidated foreign claims of reporting banks on an ultimate risk basis.

"The banks are doing contingency planning concerning a Greek exit, but you can understand why they wouldn't say so publicly," a consultant to French banks said.

President Hollande's savings raid spooks banks

(Full story)

By Lionel Laurent

PARIS | Fri May 18, 2012 11:35am BST

May 18 (Reuters) - French President Francois Hollande's plan to use savers' deposits to boost state investment power could suck billions of euros out of banks, depriving them of a major source of funding as they struggle through the euro zone debt crisis.

The centre-left president, marketing himself as a pro-growth alternative to German-led budget austerity, has pledged to double the amount people can put into tax-free, state-guaranteed savings accounts before the end of June.


The government aims to use money from these expanded accounts - which Hollande has promised will pay interest at an attractive above-inflation rate - to help fund additional building and infrastructure projects.

However, while the move may provide an expansionary pick-me-up to the economy and please hard-pressed French savers, it could spell trouble for lenders like BNP Paribas and Societe Generale.
Already on the defensive from regulations designed to crack down on risk, French bankers fear an exodus of deposits from their own savings accounts to 200-year-old state lender Caisse des Depots et Consignations (CDC), reducing their access to cheap funding.

Cheuvreux analyst Pascal Decque estimates French banks could see up to 83 billion euros ($106 billion) make their way to CDC, founded in 1816 when France was in dire economic straits after the Napoleonic Wars.

"You've got funding pressures on all types of areas for the French banks," said Espirito Santo analyst Andrew Lim. "(Hollande's plan) is going to put pressure on market deposits." 

French whizzkid trader at centre of JPMorgan bets

(Full story)

By Matt Scuffham and Lionel Laurent

LONDON/PARIS | Fri May 11, 2012 2:44pm EDT

(Reuters) - Bruno Iksil was dubbed the 'London Whale' in credit markets due to the size of the trading positions he took, but for years he stayed well below the surface avoiding detection.
Now, the French-born JPMorgan trader has been dragged from the anonymity of the trading floor into the eye of a very public storm over a $2 billion trading loss at the U.S. investment bank where Iksil worked in a little-known group called the Chief Investment Office (CIO).

Friends, colleagues and fellow traders describe an unassuming man, a far cry from the brash image normally associated with traders staking huge bets in fast-moving financial markets, including derivatives.

"He's a really nice bloke. A quiet bloke. He's not an arrogant trader, he's quite the opposite. He's very charming," one former colleague at JPMorgan said of Iksil, whom he said was married with "a couple of kids".

Iksil, who graduated in engineering in 1991 from the Ecole Centrale in Paris, looks older than he is, seldom wears a suit, and according to ex-colleagues lives outside central London.

"He's a balding chap with grey and dark hair. I'd say he's in his 40s," the ex-colleague said, adding that there were not many young traders in CIO, a relatively isolated group where everybody was in their thirties and forties.

"Nobody wears suits in CIO. You don't meet clients face to face," he added.

There have been no suggestions that Iksil's activities were in any way irregular, but over a period of years he and his team amassed a book of bets estimated by some to be $100 billion.

Sarkozy era ends after 5 years

(Full story)

By Lionel Laurent and Catherine Bremer
PARIS, May 6 (Reuters) - Socialist Francois Hollande swept
to victory in France's presidential election on Sunday in a
swing to the left at the heart of Europe that could start a
pushback against German-led austerity.

Hollande was set to beat conservative incumbent Nicolas
Sarkozy by a decisive 51.9 percent to 48.1 percent margin, the
TNS-Sofres polling agency said in a projection based on a
partial vote count.

The president conceded defeat within 20 minutes of the last
polls closing at 8 p.m. (1800 GMT), telling supporters he had
telephoned Hollande to wish him good luck.

"I bear the full responsibility for this defeat," he said.

Sarkozy, punished for his failure to rein in record 10
percent unemployment and for his brash personal style, is the
11th successive leader in the euro zone to be swept from power
since the currency bloc's debt crisis began in 2009.

Jubilant left-wingers celebrated outside Socialist Party
headquarters and in Paris' Bastille square, where revelers
danced in 1981 when Francois Mitterrand became France's only
other Socialist president.

But the celebrations may be overshadowed by a political
bombshell in Greece, where mainstream parties were hammered in a
parliamentary election that exit polls suggested may leave
supporters of Athens' IMF/EU bailout without a majority, raising
doubts about its future in the euro zone.

France's property sugar rush fizzles out

(Full story)

By Lionel Laurent

PARIS | Fri May 4, 2012 9:29am EDT

May 4 (Reuters) - French banks are facing a big drop-off in mortgage lending this year as a sickly economy and falling property prices put the brakes on a borrowing binge by homebuyers.

Home financing was a sugar rush last year for lenders like BNP Paribas and Societe Generale, driving loan growth and retail revenues as rock-bottom interest rates lured investors to the housing market.

Mortgages also helped banks defend their record of lending to the French economy in the run-up to Sunday's presidential election, which has seen Socialist frontrunner Francois Hollande pledge to curb lenders' risky activities and make regulated savings deposits more attractive.

The picture for real estate looks less rosy for 2012.

Annual mortgage production is seen slumping by 20 to 30 percent, against a backdrop of a decline in house prices that could reach 15 percent over the next two years, according to research from Standard & Poor's.

The future of tennis: Game, set and number-crunch?

(Full story)

By Lionel Laurent

LYON, France | Thu Apr 5, 2012 4:41am EDT

(Reuters) - Budding tennis stars who dream of being the next Novak Djokovic should think twice before shelling out for more coaching when they might better invest in the racket that tracks every move.

Created by venerable French tennis company Babolat, which started out in 1875 making strings from animal gut, the soon-to-be-unveiled prototype invention is designed to look and feel just like a regular, hollow-tube racket.

The twist is that the frame is lined with tiny sensors recording reams of data on every volley, lob, serve and drop shot. Uploading this information to a separate monitoring device will allow players to pore over the finer points of their performance without a coach or high-end video equipment.

It could be a big leap forward for a sport where rackets are often seen in a reverential, almost mystical light, and where critical distance and scientific analysis are left to the pros.

"There is an imaginary side to a player's racket, that it's like Excalibur, the sword that will win it all," says Eric Babolat, the company's grey-haired but youthful-looking 42-year-old chief executive, at his offices in Lyon, southeast France.

"We feel that people are looking for more rationality, more information on what is actually happening."

From Middle East to France, a Jewish school's journey

(Full story)

By Lionel Laurent

PARIS | Mon Mar 19, 2012 2:38pm EDT

(Reuters) - Rabbi Jean-Paul Amoyelle, head of the Ozar Hatorah network of Jewish schools in France, was woken at 4 a.m. during a visit to New York with chilling news.

Jewish schools and synagogues in France had been targeted in a string of attacks in the past decade, many of them arson, but this was different.

A gunman had shot dead three children and a 30-year-old Hebrew teacher at his school in Toulouse, one of 20 in France with roots in the diaspora of Middle Eastern Jewry.

The shooting marks a tragic turn for Ozar Hatorah, which was created in the wake of the Holocaust in the mid-1940s by a Syrian-born Jew intent on improving the lot of Jewish communities in the Middle East and North Africa.

In 2001 a classroom was burned down at a "Ozar Hatorah", or "Treasure of the Torah", school in the Paris suburb of Creteil, but the perpetrator turned out to be a pupil.

Amoyelle said Monday's attack was a sign of growing danger.

"This was deliberate. Anti-semitic and deliberate, I have no doubt," Amoyelle said by telephone as he was due to return to France. "I plan to install a zone of reinforced security."

Europe no handicap for golfer-turned-banker

(Full story)

By Lionel Laurent

PARIS, March 15 | Thu Mar 15, 2012 8:23pm IST

(Reuters) - Economic growth is flatlining in Europe, household spending is in a funk and retailers are cutting prices - the perfect time to invest in consumer brands that can defy the downturn, professional golfer-turned-banker John Penning says.

The 39-year-old, who traded in his clubs for a life of finance after mingling with bankers on the putting green, has made his latest private-equity bet in the euro zone, taking over a chain of warehouse stores selling second-hand furniture and electrical goods mainly in France, the Benelux countries and Spain.

Penning's Saphir Capital bought Troc, which he describes as a "second-hand IKEA," for under 100 million euros ($130 million). The investment is small compared with the world's biggest furniture retailer, which made more than 200 times that amount in 2010 sales.

But the deal is part of a wider strategy for Penning, who also owns a stake in Frey - a French developer of retail parks in France and Spain - and is looking at other opportunities in the French consumer goods sector.

"I'm still excited about the euro...What is very good is strong brands," Penning told Reuters at an event to present Troc's strategy, which involves opening new stores and increasing the amount of brand-new goods sold while still retaining a primary foothold in second-hand products.

French bank property retreat opens door to funds

(Full story)


By Lionel Laurent
PARIS, Feb 28 (Reuters) - French banks are beating a retreat from the property sector, leaving a key under the doormat for private-equity investors, insurance companies and sovereign wealth funds.

BNP Paribas, Societe Generale and Credit Agricole are all hawking bundles of property loans to prospective buyers to shrink their balance sheets to meet tough new rules designed to clamp down on risk, according to two Paris-based real-estate bankers.

The potential impact is significant as banks account for two-thirds of European commercial property lending, with more than 384 billion euros' worth of loans maturing in 2012-2014. But prospective buyers and investors like private-equity funds and insurers will be on hand to pick up some of the slack, property market experts say.

"The banks' retreat does have a rather considerable impact on investment...(But) it does leave substantial room for manoeuvre for all the private-equity funds that tend to come from the United States," said Magali Marton, head of EMEA research for property consultancy DTZ.

Bankers go on election charm offensive

(Full story)

By Lionel Laurent and Matthieu Protard

PARIS | Fri Feb 24, 2012 8:41am GMT

Feb 24 (Reuters) - Faced with the prospect of becoming the scapegoats of an increasingly bitter presidential showdown, French banks are stepping up their own campaign to convince the public and politicians of their worth.

Armed with upbeat statistics on loan growth in France and scare stories about what a crackdown on banks could do to the economy, they are pressing their case face-to-face with politicians and wooing the public with advertising campaigns.


One in-demand lunch companion is Francois Hollande, the Socialist presidential candidate taking on conservative incumbent Nicolas Sarkozy. Seen as a pragmatist rather than a firebrand by some bankers, Hollande has nonetheless pledged to break up French banks and slap them with new taxes if elected.

"We recently invited Francois Hollande into our offices and told him our point of view," an executive at one of France's biggest banks told Reuters. "We explained how things were getting dramatic. He sat with us and listened."

Hollande's team declined to comment. 

"Hollande discount" hangs over French banks

(Full story)


By Lionel Laurent
PARIS, Feb 10 (Reuters) - A declaration of war against the world of finance by French Socialist presidential front-runner Francois Hollande is threatening a rally over the past month in the shares of France's top banks.

Although a wave of cheap funding from the European Central Bank has pushed back the likelihood of a eurozone break-up and restored some confidence in French banks, the prospect of Hollande becoming the first Socialist president in 17 years is worrying some in the markets.

Hollande, a bespectacled career politician who has called finance his biggest foe, has sketched the broad outlines of measures including an extra tax on banks, separating their socially useful activities from those seen as speculative, and a ban on what he calls toxic loans.

The proposals are vague - and there are some doubts as to what extent they would be implemented if Hollande finds himself in the Elysee Palace in May - but they could cut fairly deeply into banks' profits at a time of already sluggish growth.

Keefe, Bruyette & Woods, an investment bank, estimates their impact at around 10 percent of annual earnings for top banks including BNP Paribas and Societe Generale, or a combined 1.7 billion euros ($2.3 billion).

"The measures are a bit fuzzy in our view, and these kinds of worries mean that if the rally continues I doubt French banks will be investors' preferred choice," said Marco Bruzzo, head of Mirabaud Gestion, an asset management company, in Paris.

Wells Fargo among bidders for BNP $11B energy book -sources

(Full story) (FT first broke the news BNP was selling the book; we were first to name Wells Fargo, which eventually won, as a bidder)


By Lionel Laurent
PARIS, Jan 27 (Reuters) - BNP Paribas, France's largest listed bank, is aiming to sell up to $11 billion of loans to oil and gas companies and has received interest from Canadian buyers, according to two banking sources familiar with the situation.

The sale is the latest sign of retreat by European banks, which have faced months of funding turmoil as a result of the euro zone debt crisis and are pushing to offload dollar assets to shrink their balance sheets and build precious capital.

The cutbacks are putting pressure on dollar-focused industries such as energy, shipping and aerospace. Indonesian tanker firm Berlian Laju is teetering on the brink of default, while Swiss refiner Petroplus filed for bankruptcy on Tuesday.

BNP Paribas, which according to one banker opened its energy loan-book up to potential buyers just over a month ago, has whetted the appetite of several banks in North America, particularly Canada, according to sources.

"The $11 billion figure was cited ... There is certainly Canadian interest," one banker familiar with the deal said. "Our feeling is that it is inevitably going to be broken down into chunks."

Another source said that in addition to Canadian buyers, BNP had received interest from U.S. banks including Wells Fargo and had been getting offers with a discount of less than 5 percent of the value of the loan.

"The cost of funding is killing BNP's margins so they want to get out," the source said. The portfolio contains long-term loans to energy companies that do not have the cash flow to fund their own exploration or production activities, he added.

Interview with the financier profiting from banks' pain

By Lionel Laurent and Matthieu Protard

PARIS, Jan 25 (Reuters) - Behind the doom and gloom of European banks offloading assets and scaling back lending in the face of the euro zone debt crisis, at least one financier is hoping to profit from their pain.

Veteran French banker Laurent Quirin, who heads financial services group Kepler Capital Markets, told Reuters on Wednesday his firm was broadening its reach beyond equity brokerage and poaching top talent from banks just as they were pulling back.

Kepler earlier this month launched a new business line designed to help banks offload "illiquid" - or hard to sell - assets such as mortgage-backed securities or consumer loans that would interest investors with available cash to hold them.

"We've already got quite a few mandates in this field," Quirin, 47, said in an interview at Kepler's Paris headquarters. "We have several mandates from European banks, including French ones."

French banks such as BNP Paribas and Societe Generale are at the centre of a fresh wave of asset sales across Europe's financial sector, with banks putting loan portfolios and entire activities on the block to build up precious loss-absorbing capital.

SocGen and smaller domestic rival Credit Agricole also still hold piles of toxic assets left over from the 2008 financial crisis, which they are gradually selling.

"Some products that were at some point securitised are still being held by banks, insurers and "bad-bank" structures," said Quirin. "These players can't hold them anymore."

Kepler, named after the pioneering 17th-century astronomer Johannes Kepler, narrowly escaped collapse in 2008 when the fall of its Icelandic parent Landsbanki pushed Quirin to lead a management buyout of the broker he co-founded a decade earlier.

Kepler's history of prudent business and total avoidance of proprietary trading meant its clients stayed loyal despite the crisis, said Quirin, who now wants to grow fixed-income and advisory amid a tough stock-market environment.

The new illiquid-assets business, headed by former SocGen banker Pascal Marionneau, is part of this strategy. Kepler has also set up a new structured-products unit under Nicolas Miara-Godet, another former SocGen banker, which has access to the capital resources of 22 partner banks.

The company got a vote of confidence last year when it raised 57 million euros in fresh capital by selling minority stakes to investors including French fund BlackFin and state bank Caisse des Depots. Management and employees still own 53 percent of the group.

Kepler is looking at possible acquisitions to add to its new business lines, according to former Credit Agricole banker Quirin.

"We're looking at a number of assets that might interest us, that might allow us to offer new business lines or to complement our existing lines," he said.

Kepler is targeting revenue of around 120 million euros ($155.77 million) this year after 100 million last year. The split between equities and other businesses is around 50-50, according to Quirin.

Quirin added there were no plans to extend a strategic alliance with Italy's Unicredit in Western European equity brokerage.

French banks get choosy on clients

(Full story) (exclusive to Reuters)


By Lionel Laurent
PARIS, Jan 18 (Reuters) - French banks BNP Paribas and Natixis are to focus investment-banking activity on a select list of large clients to help preserve capital and cut debt amid the euro zone debt crisis, according to memos obtained by Reuters.

The moves are a fresh indication that pressure on European banks to boost capital buffers and secure funding lines is threatening to overturn years of relationship-building as lenders fight for survival.

BNP, France's biggest listed bank, said in a document sent to employee representatives it was refocusing on "key strategic" clients and looking to cut its dollar net asset base by half at its structured-finance division, partly via asset sales.

"Our cuts in risk-weighted assets force our client coverage teams, in each zone and each country, to redefine the priority lists of preferred clients," it said. "This selection takes into account the currency of the client's financing, the client's past and future profitability and cross-selling opportunities."

Smaller rival Natixis, meanwhile, is to exit non-core activities and create a Global Transaction Banking unit offering cash management and trade finance, targeting 200 million euros ($255 million) revenue by 2015-16, according to a written presentation given to employee representatives on Jan. 13.