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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."
PARIS |
(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."
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