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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."
PARIS |
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."
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