Natixis, once David Einhorn's baby, is set to cut 700 jobs, we've been told

(this was confirmed a day after we put it out)

PARIS, Oct 15 (Reuters) - French investment bank Natixis is set to announce a plan to cut 700 jobs by 2015 as part of a drive to reduce costs, according to two union sources and documents obtained by Reuters.

The job cuts will affect most business lines including equity brokerage, equity derivatives, advisory and global transaction banking, with most of the impact hitting staff in France rather than other countries, according to the documents.

"Management held a meeting on Monday and presented the restructuring plan for the business lines through to 2015," one of the sources who attended the meeting said. "The total job cuts will be 700, according to the plan."

A spokeswoman for Natixis declined to comment.

Natixis, the smallest and youngest of France's listed investment banks, has already gone through a first wave of restructuring and sold swathes of risky assets after it was bailed out by its cooperative retail parent BPCE during the 2008 financial crisis.

But like larger rivals BNP Paribas and Societe Generale, the bank is preparing a new strategic plan and looking for ways to cut costs as eurozone crisis fears dissipate and investors focus on banks' ability to return cash and grow profitably.

Natixis took one step towards a new structure earlier this year when it said it would simplify its finances by shedding a 20 percent stake in its parent BPCE, paving the way for higher dividends in the future

That French World Cup qualifying match could mean extra cash for broadcaster TF1 next year

Tuesday night's remarkable 3-0 victory to overturn a 2-0 first-leg deficit in France's World Cup play-off against Ukraine was as uplifting for TF1's shares as for national pride. Though the broadcaster rarely books a direct profit from tournaments such as the World Cup, the company's shares jumped by more than 5 percent on Wednesday morning as investors looked forward to the indirect gains from improved relationships with advertisers, the pull of a young, male audience and a boost to brand awareness. "If you have the national team in (the tournament), it makes a huge difference," said Claudio Aspesi, an analyst at Sanford C. Bernstein. "Placing your best customers' ads in the best slots in the right games will win you loyalty and goodwill from customers. "We had assumed for 2014-15 fundamentally no growth ... but we were starting from the assumption that France would not qualify." (Full story here: http://reut.rs/I5lirM)

Vinci's ubiquitous parking lots seen attracting 2 bln euro preliminary bid values, sources tell us

UPDATE 2-Vinci parking unit bids due end Nov, valued around 2 bln euros-sources

Vinci wants to keep 25 pct as part of deal -sources

Ardian, Credit Agricole studying joint bid -sources

Vinci, Ardian, Credit Agricole decline to comment

By Lionel Laurent and Matthieu Protard

PARIS, Nov 15 (Reuters) - First-round bids for French construction and concessions firm Vinci’s SGEF.PA parking-concession business are due by end-November, and are expected to value the firm around 2 billion euros ($2.69 billion), three sources close to the deal said.

Vinci plans to keep a 25 percent stake in the Vinci Park division and expects a range of bids to value the entire business at between 1.8 billion and 2.3 billion euros, two of the sources told Reuters.

A Vinci spokesman declined to comment on Friday. "The preliminary bids are due at the end of the month," one of the sources said. "Vinci is committed to selling but on condition that it gets to the expected price."

Vinci Park operates 2,600 parking-lot assets in 14 countries and posted 615 million euros in revenue in 2012. Analysts say the unit is profitable but exposed to the mature, slow-growing French market. A deal would offer Vinci the opportunity to raise cash to reinvest in its airports business, where growth is more promising.

Vinci Park's annual earnings before interest, tax, depreciation and amortisation (EBITDA) are at around 200 million euros ($269.49 million), according to sources close to the deal. Vinci has said its airport business, which recently took over Portugal's ANA, has an EBITDA of around 270 million euros.

Potential buyers include insurers, private-equity funds and infrastructure funds - mainly long-term investors interested in recurring cash flows - and they are looking at teaming up for consortium bids, according to the sources.

Private-equity firm Ardian, formerly known as AXA Private Equity, has told Reuters it is interested in the asset and two sources said it was teaming up with Credit Agricole's CAGR.PA insurance arm to study a possible bid. Ardian and Credit Agricole's insurance arm declined to comment.

"There is appetite for this type of asset and the bids will match expectations," one of the sources said.

Interested parties are also weighing up the possibility that a change of ownership may result in a weaker negotiating position with local governments and councils that award parking concessions, the source said. The risk is that some concessions may be awarded to rivals or will have to be renegotiated, he said.

Natixis owner BPCE plans to double profit by 2017 -sources

(we put this out several days ahead of the official announcement, which confirmed the lot)

(Full story)


* Due to unveil new strategic plan next week
* Eyes 900 mln eur in cost cuts, more cross-selling
* French banks grapple with weak economy, tougher regulatio

By Lionel Laurent and Matthias Blamont
PARIS, Nov 8 (Reuters) - BPCE, the parent group of French investment bank Natixis, will unveil a plan next week to double net income by 2017 to 4 billion euros ($5.35 billion) on the back of cost cuts and cross-selling, two sources told Reuters.

BPCE, which is set to present details of its strategy on Wednesday ahead of a Natixis investor day on Thursday, will be the first of France's big banks to explain to investors how it plans to boost growth in the face of tougher regulation after the 2008 financial crisis and French economic weakness.

"BPCE believes it can achieve 900 million euros in cost cuts and a doubling of net income to 4 billion euros between 2014 and 2017," said one of the sources with knowledge of the strategy. "There will also be a target of 800 million euros of extra cross-selling synergies.

"The strategy will be to cross-sell as much as possible with Natixis and (mortgage unit) Credit Foncier to increase assets under management, capital and liquidity...The emphasis is also on speeding up cost cuts."

 

 

A BPCE spokeswoman declined to comment.

Despite replenishing their balance sheets for years after the crisis, France's banks - and their peers across Europe - remain under pressure to find new ways of doing business as new global legislation curbs risk-taking and ramps up costs.

Natixis' bigger rivals BNP Paribas, Societe Generale and Credit Agricole are all due to present new strategic plans in 2014. SocGen and Credit Agricole on Thursday announced an asset swap designed to help narrow their business focus.

The fragile outlook for French banks' home market, where unemployment is stuck at 11 percent, was reinforced on Friday when ratings agency Standard & Poor's cut France's sovereign credit rating by one notch to AA from AA+.

Under the leadership of Chairman Francois Perol, parachuted in by former President Nicolas Sarkozy to prevent Natixis from collapsing during the financial crisis, Natixis has slashed its balance sheet and focused more on getting fees from stock and debt issuances than risky trading.

Unlisted retail bank BPCE, also headed by Perol, has also taken steps to better integrate Natixis into its nationwide network of 8,000 branches: Natixis is now in control of the group's insurance business and sources told Reuters it would work on developing products to cross-sell with BPCE.

But despite the bank's restructuring efforts, which have boosted capital strength and driven Natixis shares up over 100 percent year-to-date, analysts say cost cuts are needed in investment banking and asset management to improve returns.

Natixis has already laid out plans to cut 700 jobs across several investment-banking business lines.

Hundreds more job cuts on the way at SocGen, union reveals

(Full story)

PARIS, Nov 6 (Reuters) - French bank Societe Generale plans to cut 375 jobs across Europe in its securities-services business, a staff union said in a newsletter posted online after meeting with management.

The cuts will mostly hit French staff, while around 100 jobs in Italy, Luxembourg, Germany and Ireland are being targeted as part of the plan, the newsletter said. A second union source confirmed to Reuters that management had said around 275 jobs in France were at risk.

A SocGen spokeswoman declined to comment.

SocGen, France's No. 2 listed bank, is in the midst of a drive to slash costs and cut staff to offset the cost of new curbs on risk and a still-uncertain economic recovery in Europe.

Securities services, or custody services, offers settlement, safekeeping and reporting of customers' securities.

The bank is separately finalizing a plan to cut up to 700 mainly back-office jobs at its Paris headquarters and is targeting around 420 voluntary departures as part of the plan, union officials have said.

Meet R2-D2, your new robot banker

(Full story) (and Business Insider link, just 'cause I love their enthusiasm)

VELIZY, France (Reuters) - Installation art, interactive walls and a robot doorman; the flagship branches of the world's top banks have come a long way from the iron grilles and potted plants of old.
To compete against online-only rivals and to attract a new generation of customers to branches, banks are installing sleek interiors and hi-tech gadgetry.

ATMs that read fingerprints, touch-screen desks to flick through your finances and videoconference units for expert advice are all on display at payments-technology firm Wincor Nixdorf's <WING.DE> showroom in the Paris suburb of Velizy.

"Banks are investing a lot in their retail branches," said Steve Bousabata, head of Wincor's French banking services arm. "They want customers to come back."

The reason is clear: after years of relying on branches to drive retail revenue, European banks expect such networks to supply only 62 percent of sales by 2020 from today's average of 81 percent, according to Equinox Consulting.

Banks, especially those still nursing losses from the financial crisis, are under pressure to cut costs and are balancing the need to pare back branch networks by sprucing up select outlets.

But branches are still the first point of contact for many customers and are still the primary location for product sales like mortgages, new accounts and insurance, underlining the importance of upgrading them for a more tech-savvy generation.

The difficulty is knowing exactly what belongs in the branch of the future and what is better left behind.

"Are all the things we see in branches today going to be seen in branches tomorrow? I very much doubt that," said Mike Baxter, head of management consultancy Bain's Americas Financial Services practice.
"There's an awful lot of experimentation of stuff that turns out to be unsuccessful and uneconomic."

Flashy "bank of the future" branches mixing gadgetry with design similar to Apple's <AAPL.O> minimalist stores have been opened by BNP Paribas <BNPP.PA> in Paris, Barclays <BARC.L> in London and Deutsche Bank <DBKGn.DE> in Berlin - at an estimated cost of 5 million euros ($7 million) each.
They include lounge areas, giant interactive screens and other trimmings such as handbags for sale and pieces of art.

Gauging their success is tricky. BNP was willing to give data on its refurbished flagship branch near the Paris Opera - which three years ago was fitted with a wall covered in plants, iPads for customer use and a touch-screen desk - saying that footfall was up 40 percent and new clients up 25 percent.

Italy's Unicredit <CRDI.MI> also said that footfall and new business were up at its newly revamped flagship branch in the Bulgarian capital of Sofia, which offers "welcoming scents" and a touch-screen wall. Visits are up by an average of 60 percent while loans and deposits have doubled, a spokeswoman said.

On the other hand, BNP has done away with some ideas that failed to click with consumers: it has scrapped the iPads and touch-screen desk in favor of an interactive wall.

Deutsche Bank and Barclays declined to give data on single branches.

More broadly, some 88 percent of bank executives view their flagship branches in main street areas as being "successful" in promoting brand awareness, according to a survey by Equinox.

Eurozone banks to clean house ahead of ECB review

(Full story)

By Lionel Laurent and Helene Durand

PARIS/LONDON, Oct 24 (Reuters/IFR) - Euro zone banks are expected to issue more debt, increase loan provisions and speed up asset sales in the next couple of months as they knock their balance sheets into shape ahead of the European Central Bank's (ECB) sector health-check next year.

The ECB will take a snapshot of loans and other assets, including holdings of government debt, from the balance sheets of 128 banks at the end of this year and scrutinise their riskiness before it takes over as the bloc's banking supervisor late next year.

The starting point for the ECB's Asset Quality Review (AQR) gives the euro zone's banks less than 10 weeks to burnish their books, and small to mid-sized lenders in Italy, Spain and Portugal are considered most likely to take pre-emptive action.

"Banks will want to take corrective measures before the end of the year. It's far better not to be singled out by the AQR as having had a problem and fixed it in 2014; it's better to avoid that and do it now," said Mike Harrison, a banks analyst at Barclays.

The most straightforward way of reducing the perceived riskiness of their books would be for banks to set aside more money to cover potential future loan losses, which probably implies taking a hit to fourth-quarter earnings.

"The earnings risk element of the AQR means it could take longer for the earnings cycles at many banks to normalise," said Harrison.

Eurozone banks have already shrunk their balance sheets by 2.9 trillion euros ($4 trillion) since May 2012 - by renewing fewer loans, repurchase and derivatives contracts and selling non-core businesses - according to data from the ECB.

Lenders could bring forward asset sales, including loan books, equity stakes and subsidiaries, before year-end.

"Now that we have the wording and that we know the rules of the game, I believe that some banks will feel like they have some room for manoeuvre," said Khalid Krim, Managing Director, Head of European Capital Solutions at Morgan Stanley.

"Concerning deleveraging or asset sales, we can realistically expect to see an acceleration of the timing."
Bankers said they would be careful, however, not to sell at such a pace that they had to accept poor pricing.

It's a dog's high life: French design for pets

Parisian poodles are used to being pampered by their doting owners, groomed to perfection and adorned with luxury leashes and collars.


Now they finally have the furniture to match.

A company co-founded by a former Societe Generale banker has come up with a range of high-end interior items for the furry and the feathered retailing for as much as 4,000 euros ($5,400).

The discerning cat or dog may appreciate a sofa lined with specialty textiles from Denmark. A birdcage on stilts is crafted from aluminium and oak.

The company, Chimere, even offers a lacquered litter box for cats and a minimalist, bell-shaped fish bowl.
The sofa looks like a retro-style television on short wooden legs and comes in different sizes, with customised finishes available on demand, according to the company's website (www.chimere-edition.com).

Co-founder Frederic Stouls started the venture after quitting the crisis-ridden banking sector in 2012, when he spotted a niche in the $60 billion U.S. pet market that he believes can be filled by elegant design.

"Our designs are romantic, they evoke childhood... You can see dogs taking ownership of the kennel straight away," Stouls said.

Big French luxury groups such as Kering and Louis Vuitton already offer some products for animals of privilege, such as $400 dog leashes and $3,000 cat carriers, but little beyond outdoor accessories.

After opening a retail space in Paris furniture store Silvera, Chimere's next target is the United States. Stouls said the company was also working on new ideas for products such as beehives for the design-conscious apiarist.

"This is a really big market: there are hotels for dogs, spas for dogs," he said. "But the product has to look good."

French video games co. dangles bleak Xmas over Sony, Xbox next-gen push

By Lionel Laurent

PARIS, Oct 16 (Reuters) - Shares of French videogames publisher Ubisoft slumped more than 25 percent to an eight-month low on Wednesday after delaying the release of two titles until next year, missing the holiday season in the hotly competitive industry.

Although the home-console market is no stranger to delayed releases, Ubisoft's move is the latest sign of mounting pressure in an industry where increasingly big-budget titles are having to fight harder to attract gamers' time and money in the face of nimbler and cheaper mobile alternatives.

"In a world of mega-blockbusters, we have now come to the conclusion that the team needed additional time," Yves Guillemot, chief executive of the company behind the Assassin's Creed and Far Cry series, told investors on a conference call.

Ubisoft blamed the delay on pressure to meet consumer expectations in the $66 billion hit-driven videogames industry and said the decision would cause it to swing to an operating loss for its 2013 to 2014 fiscal year.

The announcement, in a statement after Tuesday's market close, follows the huge success of Grand Theft Auto V, released last month by a unit of Take-Two Interactive, in which hedge-fund billionaire Carl Icahn owns a stake.

The delayed games, dystopian hacking adventure Watch Dogs and racer The Crew, were due to launch alongside next-generation consoles from Sony and Microsoft, making the sacrifice for quality a risky one in some investors' views.

"This is a pretty severe downward revision - these games were supposed to come out in time for Christmas," said Gregoire Laverne, a Paris-based fund manager at Roche Brune.

"They're being delayed for reasons of quality, which is a good thing, but companies like Ubisoft already have a tendency to restrict the amount of titles they produce. If they release fewer games they have to be a blockbuster every time, there is no room for error."

CONSOLE WARS

Shares of Ubisoft ended the day down 26.2 percent at 8.19 euros, giving it a market value of 782 million euros. The stock fell as low as 7.55 euros, its lowest since February.

The company now expects to report an operating loss of between 40 million euros ($54 million) and 70 million, against a previous target for a profit of 110 to 125 million.

Ubisoft also cut its sales forecast for 2013 through 2014 to between 995 million euros and 1.05 billion from a previous target of 1.42 to 1.45 billion.

The console market is trying to shrug off declining sales and the rising quality of mobile games with the launch of new high-powered machines, which themselves need major triple-A titles to generate interest.

"Console game revenues have been falling for a few years now, which has been very difficult for the games companies and one reason why there has been a focus on a smaller number of blockbuster titles," said Ed Daly, managing partner at Tenshi Consulting.

"People are managing to get their fix of games on other devices, especially smartphones."

The rapid growth of mobile gaming, thanks to devices such as the Apple iPhone, contrasts with consoles' woes and is attracting investor interest: Japan's SoftBank Corp is offering Nokia 150 billion yen ($1.52 billion) for a majority stake in Finnish mobile games-maker Supercell.

Publishers like Ubisoft and industry heavyweight Electronic Arts are also pouring resources into mobile: Ubisoft earlier this month announced the acquisition of mobile studio Future Games of London, while mobile and digital accounted for over 76 percent of EA's fiscal first-quarter revenue.

"The big-budget massive console releases, the triple-A releases, those gambles are becoming increasingly important to get right," said Nick Gibson, founder of Games Investor Consulting.

A pack of Gauloises and a savings account, please

By Lionel Laurent and Matthias Blamont

PARIS, Oct 16 (Reuters) - The French will soon be able buy their cigarettes and do their banking at the same time with the launch of a stripped-down, cut price bank account by the country's huge network of tobacconists.

France's 27,000 "tabacs", whose distinctive red, diamond-shaped signs dot the nation's streets, will be out to win business from the likes of BNP Paribas and Societe Generale as established banks cut back their retail networks in a stagnating economy.

The Nickel bank account, which after initial tests is due to be expanded nationwide next year, will offer customers a debit card and a current account for 20 euros ($27.17). That compares with about 28 to 30 euros for the cheapest payment cards at BNP, SocGen and Credit Agricole.

Though Nickel clients will be charged fees for depositing and withdrawing money, the tabac association CBF still estimates the cost of having an account at less than 50 euros a year. The association says this is a third less than the cost of an account with Bank of France.

Nickel, co-founded by ex-SocGen communications chief Hugues Le Bret, also wants to lure people on the fringes of the system who may be unable to open a traditional bank account.

"With this account, we are bringing banking access to those who feel they've been forgotten, notably in rural areas, or simply shut out because of a mistake along the way," Pascal Montredon, head of the CFB network, told a press conference.

Nickel estimates that 1 percent of the French population does not have a bank account, while there are 2.5 million people who are classified as "overindebted" and 6 million who are unhappy with their current bank.
It also said that it wants to help to fight debt problems by not offering loans and is using the slogan "100 percent useful, zero percent toxic".

Nickel is being launched at a time when French retail banking, traditionally a cash cow thanks to lucrative fees and widespread appetite for conservative savings products such as life insurance, is taking a hit from the stagnant economy and competition from cheaper online competitors.

Lenders themselves are trying to come up with alternatives even as they close branches. BNP this year launched the online-only Hello Bank in Germany, Belgium, France and Italy to bring in customer deposits without a bricks-and-mortar branch network.

Consumer association UFC-Que Choisir, which has railed against the rising cost of bank charges, said that Nickel might help hard-pressed consumers to save money on bank fees.

BNP declined to comment. SocGen and the French Banking Federation did not respond to requests for comment.

One of Europe's top bankers says the whole tax-haven thing is over. Others disagree.

(Reuters) - The practice of funnelling money to tax-free or low-tax countries such as Switzerland in order to avoid paying more punitive taxes at home is finished, the head of French bank Societe Generale (SOGN.PA) said on Tuesday.


Governments and regulators across the world have cracked down on tax evasion in the wake of the financial crisis, a drive which has seen the United States and Europe heap pressure on Switzerland, Liechtenstein, Monaco and others to surrender more information.

"With all the reforms today that have been done by various governments, tax havens - that is to say people with secret bank accounts hidden somewhere to avoid the tax authorities - in my view, that is over," SocGen Chief Executive Frederic Oudea told French television channel BFM.

Citing the example of Switzerland, he said: "What is happening right now means that nobody will take that kind of risk anymore."

Swiss banks last month publicly apologised for their role in helping tax cheats, following a landmark settlement with U.S. authorities that would allow lenders to come forward over tax evasion by U.S. customers and avert prosecution by paying a fine.

The crackdown has effectively meant that an incoming U.S. law requiring foreign banks to surrender information on U.S. account holders has become unnecessary, Oudea said.

The Foreign Account Tax Compliance Act, or FATCA, was enacted in 2010 but takes effect in July 2014. It requires foreign financial institutions to tell the U.S. tax authorities about Americans' offshore accounts worth more than $50,000.

"What is happening today, particularly in Switzerland, makes this law unnecessary," Oudea told BFM.
The head of UK advocacy group Tax Justice Network, John Christensen, said the idea that the days of tax havens were over at this stage "remains entirely wishful thinking".

"The use of secret bank accounts is rapidly being superseded by using offshore trusts and secret foundations," he said. "We're also seeing a wider number of jurisdictions, with Hong Kong, Singapore, Mauritius very rapidly gaining market share, and that is partly a reflection of what's happening as wealth concentrates in the Far East."

Interview: AXA Private Equity, now "Ardian", eager for deals

By Lionel Laurent and Matthieu Protard

PARIS, Oct 4 (Reuters) - French private-equity firm Ardian, recently spun off from insurer AXA AXAF.PA, expects to make two more deals before the end of the year after closing its latest buyout fund, one of its executives told Reuters.

Ardian, which has committed almost a quarter of the 2.4 billion-euro ($3.27 billion) fund, is riding a pickup in interest in European assets from foreign investors and is eyeing mid-sized targets in France, Germany and Italy that have international exposure and growth potential.

"We are looking to make two more transactions before the end of the year," Ardian Senior Managing Director Philippe Poletti said in an interview. "(European) companies are broadly in good shape... But not everyone has growth potential."

Formerly known as AXA Private Equity, Ardian manages $36 billion in assets and is headed by Dominique Senequier, one of France's best-known female executives. Recent acquisitions include German pharmaceuticals specialist Riemser, French engineer Fives and a minority stake in London's Luton airport.

As well as mid-sized buys, Ardian Managing Partner Dominique Gaillard said in the same interview that the firm was eyeing infrastructure assets like Vinci's SGEF.PA parking lots and more sizeable investments such as French catering group Elior.

"(Vinci Park) is something that interests us," Gaillard said. "If we look at it, it will be via our infrastructure fund. On Elior, there is no offer ... But we are interested."

Ardian also recently teamed up with China's Fosun 0656.HK to bid for French resort chain Club Med CMIP.PA, worth around 550 million euros. The bid was extended after shareholders issued a legal challenge but Gaillard said the bid would stay the same and that the complaints were "excessive".

Although deal making in Europe has been in the doldrums throughout the eurozone crisis, market conditions in the private-equity market have begun to improve with competition for assets less heated and banks more willing to lend, Poletti said.

There is also plentiful liquidity for the time being, he added, despite the risk of a knock-on effect in bond markets once central banks begin to unwind crisis-era liquidity support.

FRENCH IMAGE
When it comes to selling assets in Europe, the key will be taking advantage of growing cross-border interest from U.S. trade buyers and Chinese investors, Ardian's Gaillard said.

Although France has a reputation for being hostile to foreign takeovers - the French government scuppered a planned takeover of Dailymotion by U.S. web giant Yahoo YHOO.O - Gaillard said there was less uncertainty now on the tax environment and that he was optimistic about the future.

"We will see U.S. trade buyers come back ... And the Chinese have always been ready to seize opportunities," he said. "There is a gap between the (French) rhetoric and the reality, even though it's clear that the rhetoric has done a lot of harm."

As for Ardian's future strategy as an independent entity, with AXA retaining 23 percent in the firm, Gaillard stayed tight-lipped. Asked whether there could be an initial public offering of Ardian one day, he said it was not on the agenda.

Embattled head of pan-African Ecobank tells us he's open to changes

By Lionel Laurent

PARIS Fri Sep 27, 2013 6:32pm BST
 
(Reuters) - The chief executive of Ecobank (ETI.LG) said on Friday he was open to changing how the African lender decides on compensation and selection of board members amid Nigeria's continuing inquiry into governance issues at the bank.


While CEO Thierry Tanoh reiterated there was no substance to allegations of misconduct by a former employee that first triggered the probe by Nigeria's SEC, he told Reuters there were certain changes he believed could improve transparency and governance at the pan-African bank that operates in 34 countries.

"One issue that has already been raised is that Ecobank's group chairman is also the chairman of the governance committee," Tanoh said in an interview.
"There are other things: we could have a remuneration committee for certain executives and a selection committee for board members."

Ecobank, which is often touted as a pan-African banking success story, has seen its image take a hit from the Nigerian probe. The bank says the group's suspended head of finance, Laurence do Rego, has alleged she was asked to misstate 2012 results and that assets were being unnecessarily sold at a loss.

"I arrived in October 2012 ... How could I have put pressure in order to go back and misstate results?" said Tanoh, who dismissed the alleged activity as illogical and impossible to achieve without misconduct at all levels of the bank. "The SEC is obliged to investigate ...(But) the claims are impossible."

According to Ecobank, do Rego was suspended after she was caught lying about one of her qualifications and only then filed her complaint.

"I obtained permission to suspend (do Rego) ... I informally suggested she look for other opportunities ... And then she triggered everything," Tanoh said.

Looking to the future, Tanoh said he had no intention of stepping down but that calls for Chairman Kolapo Lawson to resign could only be answered by Lawson himself.

The CEO also said that he was confident in Ecobank's ability to drive growth organically and to cut costs.

 He said the bank's cost-to-income ratio should fall to below 70 percent next year from 71.3 percent in the first half of 2013.

"We have to work in a more efficient way ... This could mean taking a bank branch with too many staff and reallocating headcount elsewhere," he said.

Europe set for financial M&A pick-up, private-equity fund says

By Lionel Laurent and Matthias Blamont
PARIS, Sept 11 (Reuters) - Financial dealmaking will pick up in Europe as slow growth and tougher regulation prompts banks to try to slim down and boost profits, the co-founder of private equity firm BlackFin said on Wednesday.

Paris-based BlackFin has built up a portfolio of niche financial businesses across Europe since launching a 220-million-euro ($290-million) fund in 2011.

It expects to make more acquisitions of up to 100 million euros each and is eyeing Spain, Germany and Central Europe, Paul Mizrahi told Reuters in a telephone interview.

BlackFin is part-owner of brokerage Kepler Capital Markets, which recently struck a deal to buy French bank Credit Agricole's CAGR.PA broker Cheuvreux.

The firm sees more buying opportunities in asset management, insurance and equities brokerage and may launch a new fund within the next year or two, Mizrahi said.

While BlackFin focuses on small niche investments, there is increasingly deep-pocketed competition for European banking assets in general. Carlyle Group, Warburg Pincus and Apollo Global Management have all focused on European financials in recent years with varying degrees of success.

"This is a pretty ripe market for investment," Mizrahi said. "We are seeing an increase in the number of asset sales, either by insurers or banks, of subsidiaries that are no longer seen as strategic ... It's a big opportunity."

European banks have been under pressure since the 2008 financial crisis to sell assets to meet tougher post-crisis capital requirements. However, depressed valuations and the euro zone's troubles have deterred major cross-border deals.

"In asset management, whether in France or Germany, we once saw banks actively buying boutique firms ... some were successful but others were left by the wayside," said Mizrahi. "We are really interested in this sector."

BlackFin already owns wealth management advisory firm Cyrus Conseil.

There are also more bolt-on acquisitions to find for businesses like Kepler, which has struck deals with Italy's Unicredit CRDI.MI as well as Credit Agricole; the next step could be acquiring a broker in Spain, said Mizrahi, who also cited Germany as another market where deals could be made.

"We are seeing more and more offers from Germany," he said, noting that the country's banks were "not ahead of the pack" in terms of balance-sheet clean-up.

Mizrahi says BlackFin's portfolio, which includes French paycard provider Moneo, Italian insurance website Chiarezza and German online finance marketplace Finanzen, was overall bought relatively cheaply at around 6 to 7 times earnings before interest, tax, depreciation and amortization (EBITDA).

"We are already getting offers for a few of our holdings," he said. "In a world where there is zero growth, where the overall size of the market is not increasing, you must invest in the small players."

Special Report: Inside Qatar's (Tax-Free) Luxe Property Empire

(Full story)

My investigation of Qatar's property holdings in France, using a mix of public regulatory filings, turned up 6 billion euros' worth of luxury real estate and prompted TV coverage such as this report: http://videos.tf1.fr/infos/2013/le-parc-immobilier-du-qatar-en-france-depasserait-les-6-milliards-8260647.html

 
(Reuters) - The Champs-Elysees lures millions of tourists every year to enjoy shopping at the Elysees 26 mall, poker at the Aviation Club, plush cars and futuristic architecture in the Citroen showroom, or feather-clad showgirls at the Lido cabaret.


But for all their Parisian charisma, none of these attractions are French-owned. They belong to the royal family of Qatar, a resource-rich emirate about 3,000 miles away.

Some Muslims may frown on investments in gambling, alcohol and high-kicking dancers, but over the past few decades the buildings have helped bolster Qatar's global portfolio of trophy assets, including London's Harrods and Singapore's Raffles Hotel. The latest French addition was a chain of upscale malls under the Printemps banner, bought by a fund controlled by Qatari royals in August for 1.7 billion euros ($2.23 billion).

For oil-rich royalty from the Arab Gulf, part of the attraction of the United Kingdom has been the fact it charges no taxes on profits foreign investors make when they sell real estate. Five years ago, Qatar sealed a similar agreement with France. The treaty was agreed by former center-right president Nicolas Sarkozy in 2008, and is one of the most generous Qatar has secured, exempting Qatari investors from taxes on the profits they make when they sell properties.

In a country where 3.6 million people lack decent housing, according to Abbe Pierre, a charity, that is controversial.

Politicians, including some in Francois Hollande's new Socialist government, have been critical. In April budget minister Bernard Cazeneuve called the treaty "an exception that we do not wish to duplicate." Others have asked if the accord brings economic benefit to compensate for the lost tax revenue.

The government has said it is examining the treaty, but an official at the French finance ministry told Reuters that Qatar's purchases don't have to be declared, so it is impossible to see how much tax is at stake.

A Reuters examination of regulatory filings, court documents and other data sheds new light on Qatar's property assets. Reuters mapped around 40 properties in France that are owned by Qataris, a total investment of 5.9 billion euros ($7.8 billion) over the past decade, including 4.8 billion since 2008. At current values they would be worth around 6.3 billion euros.

The Qatari state and its sovereign wealth fund own about a dozen of the properties, together worth around 3 billion euros, Reuters found; the rest belong to members of the ruling al-Thani family. A personal fund set up by Sheikh Hamad bin Khalifa al-Thani, the previous emir, controls about nine of them; his children, including the current emir, six. The rest were bought either by other relatives, or businessmen with strong ties to the al-Thanis, such as Ghanim bin Saad al-Saad.

Each property is owned by a holding company that is itself held by one or more entities, some of them outside France. This makes it hard to track when properties change hands, to see how much tax the French have forgone with the deal.

If there had been no treaty, though, market values at the end of 2012 suggest the French government would have collected at least 145 million euros in tax if the entire portfolio were sold and taxed at the lowest applicable rate, according to Reuters calculations which were assessed by three experts.

While that's less than a day's gas export revenues for Qatar, in France it would equate to a year's pre-tax pay for some 4,500 schoolteachers or nurses.

The Qatari authorities and the sovereign wealth fund Qatari Diar did not respond to questions. Chadia Clot, whose company French Properties Management handles private investments made by the al-Thani family, did not respond.

Gilles Kepel, a professor at the Paris Institute of Political Studies, Paris, said Qatar's financial gains symbolize how the emirate has gained influence by spending its resource wealth, but has also triggered friction.

"Qatar has had a full-speed-ahead investment strategy in France, forged under the previous French administration," said Kepel. "But this has led to antagonism."

 (Full story)

Europe's recovery is real, BNP's CFO tells us

Europe's economy is showing signs of improvement and should lead to a more visible turnaround in the second half of 2013, the co-chief operating officer of French bank BNP Paribas (BNPP.PA) told Reuters Insider TV.


"We are seeing early signs of improvement but for me it will be more in the second part of the year," Philippe Bordenave said in an interview to present BNP's second-quarter results.

Commenting on the outlook for loan-loss provisions, he added: "We are relatively confident as far as France and Belgium are concerned...in Italy, it may be somewhat more difficult, given the recession."

French bank eyeing more deals in China's lucrative insurance market

PARIS, July 8 (Reuters) - BNP Paribas, France's No. 1 listed bank, has taken its first step into China's insurance market by buying Dutch bank ING's stake in a partnership with Bank of Beijing.

BNP is in the early stages of a plan to ramp up revenue and staff in Asia to offset recession in the euro zone, where it is heavily exposed.

ING, meanwhile, is having to shrink into a smaller, Europe-focused bank after it was bailed out by the Dutch government in the 2008 crisis.

The terms of the China deal were not disclosed, but BNP's insurance chief told Reuters on Monday that the joint venture represented 200 million euros ($257 million) in insurance premium income.

"We want to invest in this joint venture and will grow by adding clients, new products and eventually by making new partnerships," Eric Lombard said in a phone interview.

The deal, which has yet to be signed off by regulators, gives BNP a slice of the world's No. 2 insurance market and offers a route to cross-selling with other parts of the French bank, which recently raised its stake in existing partner Bank of Nanjing.

It also shows that top French banks like BNP and Societe Generale are stepping up their investments in China after focusing on more mature, developed banking markets in the past. SocGen last month opened its seventh mainland branch in northeastern China, near the Russian border.

However, smaller French rival Credit Agricole has been cutting its Asia exposure as part of a drive to focus on its home market in the wake of the euro zone crisis. It is in the closing stages of a deal to sell its CLSA Asian brokerage unit to China's CITIC Securities.

ING said in a statement that the sale of its 50 percent stake in the China venture would not have a "material" impact on group results or affect ING's own 13.7 percent stake in Bank of Beijing.

Currently, foreign banks are not allowed to own more than 20 percent of a Chinese lender. Canada's Bank of Nova Scotia said in May that Chinese authorities were reevaluating a proposed deal to sell 20 percent of Bank of Guangzhou to the Canadian bank.

Jerome Kerviel, still in Paris at a courtroom near you

By Lionel Laurent

PARIS, July 4 (Reuters) - A Paris employment tribunal on Thursday rejected former Societe Generale trader Jerome Kerviel's plea for a new expert inquiry to help overturn his dismissal in France's biggest-ever trading scandal in 2008.

In a separate criminal case, Kerviel is running out of options to escape conviction and a jail sentence upheld by an appeals court in October over 4.9 billion euros ($6.4 billion) in losses that French bank SocGen said were the result of unauthorized trades by Kerviel.

The 36-year-old ex-trader, who was ordered to repay the huge sum in its entirety, has never denied masking the 50 billion euros in market positions that went wrong as the financial crisis unfolded in early 2008. He has, however, always said his bosses knew what he was doing, an accusation SocGen denies.

Kerviel has asked the employment tribunal to overturn his dismissal and grant him 4.9 billion euros in damages but no new inquiry will now be opened.

Speaking to supporters and media outside the courthouse after the hour-long hearing, an unshaven and tieless Kerviel said he was disappointed but would keep fighting ahead of a final ruling by the employment tribunal, which could take months.

"I am disappointed, of course ... They've refused (my demands)," he said. "We will keep going."

Far-left groups and the popular press in France have painted Kerviel as a naive victim of big finance, despite his role before the case as a highly-paid trader. Dozens of supporters chanted slogans against SocGen and threw fake banknotes like confetti outside the court, also brewing coffee and serving croissants to the crowd.

SocGen's legal team issued a short statement saying Kerviel had been late in submitting several demands and that after a "lengthy debate" the employment tribunal had rejected them.

"Despite the media presence orchestrated by Jerome Kerviel, the legal system showed once again that it could remain clear-headed," it said.

Without a new inquiry, it is unlikely there will be any new elements brought to light that might help Kerviel's case, either before the employment tribunal or in the criminal proceeding.

LEGAL PARADOX
The former banker still has a chance of winning on some points, however, thanks to the technicalities of French employment law, argued Mabrouk Sassi, a lawyer who specializes in tax, business and employment law.

Under the terms of his dismissal, SocGen said he had wilfully sought to hurt the company, which may be successfully rejected, Sassi said. But even a victory for Kerviel in this case would only represent around 800,000 euros, barely a dent in the 4.9 billion due. He may also still face time in jail.

"The paradox is that SocGen could lose on the dismissal but win the criminal case," said Sassi.

Kerviel was flanked by his lawyer, David Koubbi, and far-left political firebrand Jean-Luc Melenchon, who compared the former trader to Alfred Dreyfus, a Jewish military officer and victim of anti-Semitism who was wrongfully charged with treason in the 19th century.

"This is a case of one individual against the financial world," Melenchon told reporters. "It is emblematic of the kind of world we are living in."

One of Kerviel's supporters, 60-year-old former secretary Sylvana Fauvet, said she viewed the ex-trader as a victim.

"I came to support (Kerviel)...They've already condemned him to death by making him repay the 4.9 billion," she said. "It's the bosses who are always responsible for what happens at a company, including when there are losses."

Interview: UBS France chief tells us he wants to grow despite tax probe

(Full story) 

By Lionel Laurent and Matthias Blamont

PARIS Fri Jun 28, 2013 4:54pm BST



(Reuters) - An internal review by UBS's (UBSN.VX) French unit into allegations that it sold products designed to evade taxes has yet to find evidence of law-breaking, the Swiss bank's French chief told Reuters on Friday.

Putting a positive spin on UBS France's financial health and downplaying the impact of an ongoing tax probe by the French authorities, Jean-Frederic de Leusse told Reuters the bank had shed jobs, tightened risk controls and was targeting market-share gains at its wealth-management business.

Governments across the world are cracking down on tax evasion in the wake of the financial crisis and France's Socialist government is under pressure to act after its budget minister quit over an undeclared bank account in March.

UBS is being probed over its sales practices after a former executive told the authorities that Swiss bank accounts were being illegally sold on French soil and recorded in a separate account-keeping system used to help calculate bankers' bonuses.

The investigation is ongoing but France's ACP banking regulator, after mounting its own inquiry, this week fined UBS France 10 million euros (8.5 million pounds) - its biggest-ever fine - for dragging its heels in fixing lax risk controls.

Describing the fine as "disproportionate", UBS' de Leusse said the bank would likely appeal. There was no sign yet of illegal activity in transactions reviewed by UBS France, he added.

"We are fully cooperating with the authorities and we are justifying each transaction, line by line, to show that what has been done was legal," de Leusse said on Friday in an interview at the bank's offices near the Paris Opera House.

De Leusse, previously an investment banker at boutique firm Arjil and before then an executive at Credit Agricole (CAGR.PA), said that he had seen no evidence of impropriety so far.

"At this stage I have not identified any transaction that would be an issue," he said.

Interview: SocGen CEO says EU should be strict on bank failure

(Full story)

(Reuters) - Europe's legal framework to decide who pays if banks fail should avoid granting too much flexibility to individual EU member states, the head of French bank Societe Generale (SOGN.PA) told Reuters on Wednesday.


The law on rescuing and closing banks in the EU is central to the 27-nation bloc's banking union, which aims to prevent future financial crises and get the economy out of recession.

EU states have been at odds on how to distribute the cost of shuttering banks. Germany favors strict norms across the EU on how losses would be spread across shareholders, bondholders and depositors.

Britain, Sweden and France want more flexibility. SocGen Chief Executive Frederic Oudea appeared to distance himself from the French government's position.

"There should not be too much flexibility," Oudea said in an interview on the sidelines of a finance conference.

"It is better to have the same rules of the game from one country to the next and that these rules be clear, understandable and applicable for both depositors and investors."

SocGen, France's second-largest listed bank, was among the lenders caught in the flare-up of the eurozone's sovereign-debt crisis in 2011. It has since cut jobs and sold assets to bolster its balance sheet and is eyeing an extra 900 million euros ($1.17 billion) in savings by 2015 to lift profits.

Despite the bleak picture for the eurozone economy, which remains mired in recession, Oudea said he did not think SocGen would need to cut costs more aggressively than planned.

The CEO also appeared to dismiss the idea of a sharp rise in loan-loss provisions in SocGen's home market, despite a jobless rate that is at 15-year highs and consumer belt-tightening.

"We are not seeing a rise in defaults," he said.

French Bank SocGen Now Wants To Buy An Asset It's Been Trying To Sell For 2 Years (sources)

(Full story)

(Reuters) - French bank Societe Generale is in talks to buy out rival Credit Agricole's 50-percent stake in their jointly owned brokerage Newedge, several sources familiar with the matter told Reuters.

SocGen had previously sought to exit derivatives-focused Newedge, as part of a post-crisis drive to strengthen its balance sheet, but a lack of buyers has pushed France's No. 2 listed bank to look instead at ways it might better integrate the business by taking full control, the sources said.

 

SocGen and Credit Agricole have yet to reach agreement on a price, one of the sources said, adding it was a complex business in an uncertain market environment. The total business has an equity value of around 800 million euros to 1 billion euros ($1.07-$1.33 billion), according to banking and analyst sources.


"SocGen, which previously has wanted to sell its 50-percent stake in Newedge, is now looking at buying the whole business," said one of the sources. "After trying to sell it, it became obvious that they weren't going to get a good price, so now it's about doing the next best thing."

Spokeswomen for Societe Generale and Credit Agricole CIB declined to comment. Newedge referred a request for comment to its parent shareholders.

SocGen - which has kicked off a drive to cut 900 million euros in costs through 2015 - is giving priority to flow products, or the trading of low-risk securities that consume little capital, and believes that taking over Newedge would fit into this strategy, the source said.

Newedge has also recently taken steps to restructure itself. In December it said it was considering a split of its asset execution and clearing businesses as part of a wider restructuring aimed at making it more competitive.

Newedge last year reported a halving of net profit, to 14 million euros ($18.67 million), versus 33 million in 2011. It had around 50 billion euros in assets at end-2012.

(Reporting by Lionel Laurent in Paris, Michael Flaherty and Nishant Kumar in Hong Kong; Additional reporting by Denny Thomas in Hong Kong and Matthias Blamont in Paris; Editing by Carmel Crimmins and Elaine Hardcastle)

I spoke too soon...

...in my previous post, when I puzzled over the lack of French outrage over the PRISM reports in The Guardian and the Washington Post.

Now that the face of Edward Snowden is attached to the story, there's been some reaction from... ...Marine Le Pen, head of the far-right National Front.

And much like the Glenn Becks and Michael Moores of this world, Le Pen's response is to lionize Snowden (proof that there is often an overlap between extremes of both left and right). She even wants President Francois Hollande - whose administration, as far as I can tell, has offered no real response to or condemnation of the PRISM revelations - to offer Snowden asylum in France (!) in a gesture to show that France is a great "land of liberty".

(Full marks go to Europe 1 radio for actually trying to get a reaction out of French Digital Economy Minister Fleur Pellerin, who said on Monday: "The information that has come out is worrying...But the companies concerned have stated that they were unaware of the programme and did not participate. I think it's too early to form an opinion.")

As I discussed in my previous post, France does not have a great track record in curbing surveillance powers and several recent laws have been attacked by advocacy groups as giving too much power to the authorities to monitor, filter and spy on telecommunications.

Yet the French media are treating this as a kind of distant US story, despite the obvious potential implications for French users of Google, Facebook, etc.

French tech-industry website www.usine-digitale.fr even interestingly posits the theory that French cloud-computing providers will benefit by distancing themselves in terms of security from their U.S. rivals.

In other words, despite the global nature of the Internet and the incredible dominance of U.S. tech companies and websites over the whole planet, the PRISM story may turn national and be a further push for online services to be cut up and balkanized - much like the banking sector in the wake of the 2008 financial crisis.

But let's wait and see how users react...

Le Prisme

The U.S. PRISM story turned out to be utterly gripping this weekend, even though it managed to completely eclipse the potentially far more terrifying earlier report on the NSA's regular collection of 'metadata' on millions of U.S. calls. (The Obama administration defended the practice of collecting telephone records, while Verizon declined to comment.)

There were some ripples in Europe, as our coverage indicated, with lawmakers in UK, Germany and Switzerland calling for more information - though in France the reaction was pretty muted.

So why was the weekend news in France focused on national stories and the French Open rather than a potential threat to privacy that could theoretically stretch to France if information on French citizens was being collected by PRISM?

Not sure. But what is interesting is that France has already done a lot of soul-searching about surveillance and cybersnooping over the past few years - and seemingly come to terms with it.

Under previous president Nicolas Sarkozy came "Hadopi", the agency that allowed music and movie rights holders to monitor peer-to-peer sharing and meted out punishments to those who were illegally downloading content. Also under Sarkozy came "Loppsi 2", a law that The Register painted as worse than Australia in the "Big Brother stakes". Though France's constitutional court later scrapped a few of its measures, the law gives the authorities greater powers to combat cybercrime and terrorism - by planting spyware to monitor those suspected of serious crimes, for example, albeit only with a judge's approval. Rights groups were especially angry over the law's allowing of filtering, censorship and blocking of offensive websites without court approval - right now it only concerns sites displaying child pornography but the advocacy groups said there was a risk it might broaden.

Now, under Francois Hollande, France is preparing its own electronic surveillance data-gathering platform, called PNIJ. (Internal documents have been leaked by blogs, while the broad outline has been openly confirmed by police unions among others.) Now I don't know *at all* what PRISM is for sure, given the disparity between the Powerpoint presentations given by the Washington Post and the Guardian and the official statements by the tech companies and the U.S. intelligence chief, but if we take the authorities at face value and imagine that it is a quicker, easier but still legal way for the authorities to request and gather telecommunications data on a court-approved basis, then, well, that's pretty much what the PNIJ seems to be according to the leaked documents. The rest is up to the laws regarding electronic surveillance, which are obviously different in both countries.

There hasn't been much outrage at all over PNIJ in France, apart from those police staff who say they aren't equipped to deal with it and some blogs and other reports that warn it might be risky to centralise private data in this way.

So while things may change, for now I can understand why there might not be an instinctive rush by France to find out exactly what kind of snooping has been going on in the U.S., largely because getting to grips with the surveillance going on in France has been controversial enough for a good few years now.

Even the French gripe about "l'exception culturelle"

There's a nice piece by Simon Kuper in the FT about France's "exception culturelle" and why it "makes more sense than ever," basically arguing that it is only fair for France to seek to give its domestic artists and filmmakers a helping financial hand in a world where the English language rules the roost and where technology has made the global media market a lot more crowded.

You can read it here, if you can afford to break the paywall.

My only issue with the piece, aside from the fact that it equates U.S. tax breaks on donations to the art world with French levies on movie-theater tickets purchased in France (the parallel would surely only work if art galleries or museums based in U.S. were forced to give away exhibition proceeds to the state), is that it doesn't touch on criticism from even within France of some of the ways cultural subsidies work here.

Take the movie industry. In France, there is a blunt-force approach to promoting home-grown talent that involves simply siphoning off cash from a variety of sources in the media industry and then reinvesting the cash pot into domestic entertainment. Ticket sales at cinemas are taxed at 11%; revenues from TV advertising and licence-fee revenues, as well as telecom operators' subscription revenues are taxed at anywhere up to around 5%; video/DVD and video-on-demand sales are taxed at 2%.

All this made for a total cash pot of 841 million euros ($1.1 billion) in 2011 for the CNC, the Centre National du Cinema, which takes in the money and decides how to allocate it for the good of French cinema.  That's a 59% increase from 2007's intake, only a slightly less impressive rate of growth than registered by the  money put into various financial products by the CNC over the same period (growth rate of 63%). You can find all these figures in a typically dry report from France's state auditors, the Cour des Comptes.

Aside from the seeming incongruity of relying on ticket sales from, say, Iron Man 3 or The Great Gatsby to fund the development of French movies, via a tasty advance to budding film projects, the big problem with all this money sloshing around is that it artificially bloats - rather than supports - unpopular cultural output, critics say.

A fun piece by Capital.fr ran the numbers in April to determine who were the biggest black holes of cinema subsidies in France. In pole position, director Jacques Doillon, whose last three movies had an average budget of over 2 million euros, an average subsidy of 880,000 euros and attracted an average total audience of just under 25,000 people. That's a subsidy of 35.90 euros per ticket. The article also hones in on pouty actress Emmanuelle Beart, whose movies are regularly given subsidies despite having a batting average of under 30,000 viewers.

Some French filmmakers have become increasingly vocal about the perceived injustice of the way these subsidies are doled out. The producer of Oscar-winning silent smash The Artist - cited by Kuper in his column as an example of a French movie that could actually compete on the world stage because it wasn't in French - said in 2012 that the CNC was a "buddies' network" that only gave money to movies that would never get made otherwise. (He says The Artist didn't get the CNC's subsidy.)

French director Matthieu Kassovitz also blamed the subsidy system for failing to breathe new life into French cinema. A case of sour grapes, some might say, given that his last three movies got 1.4 million euros in subsidies on average, according to Capital.fr. On the other hand, the CNC denied funding for his 1995 classic La Haine, which was huge.

A lot of the distress concerns the opacity of the CNC's decision-making process. Sure, we know who sits on the committees that award advance funding - namely screenwriters and filmmakers who are actively working in the industry, which already seems kind of ethically fraught to me but whatever - but it's not clear exactly what tips one script into the good pile over any other if we accept that financial viability is not a criteria.

So yes, by all means, say that it makes sense that France would want to preserve its domestic entertainment industry from being forced to give up crucial subsidies. But there has to be a point at which, when even the patient doesn't want to take the medicine, you look at changing the treatment.

As Happy And Wealthy As...A Frenchman?

Some enjoyably counterintuitive figures for you today.

The French, who are famous for being incredibly gloomy, for applauding soak-the-rich rhetoric and for grinding economic stagnation, are actually happy and pretty darn wealthy, as it turns out.

A new poll for Le Monde by BVA (ironically the same polling agency that ranked France as more pessimistic than Afghanistan and Iraq) found that 81% of French people were happy. Happy and rather self-satisfied, given that more than two-thirds said they were better off living in France than in US, Europe or the rest of the world. A majority also said that President Francois Hollande and his Socialist administration, which only a year ago seemed to embody popular French resistance to austerity and any change to the generous social safety net, needed to be more aggressive in pursuing reform.

Compare that with Credit Suisse's Wealth Report from October, which reported that France has more dollar millionaires than any other country in Europe. A country that culturally shies away from bling, that views bosses and businesses as barely one notch below demonic and that supports more taxes on the wealthy has more millionaires than the UK or Switzerland! Of course, once you hit the 50 or 100 million dollar mark, France finds itself overtaken by Germany and the UK. But the millions matter.

A lot of this won't come as much of a surprise to France-watchers, who know that French households have for decades been shunning debt and risk and accumulating wealth by stocking up on property (a whopping two-thirds of assets) and tax-friendly life-insurance funds. As a result the French are more prepared than most think to see changes to their social model. You tend not to want more austerity once you actually feel its effects; see how the Brits have turned on George Osborne's bitter economic medicine.

The question is what happens next to all this wealth. Can house prices avoid a serious correction? Will the French always be happy with low-leverage, low-return investments? Will the happiness itself continue? The hope in some corners must be that with minimal changes to the system and a cyclical pick-up in confidence, those wealthy French households will go back to spending again. But for the pessimists, that would only make the next crash much harder to overcome.

French banks battle economy with more cost cuts

(Full story)

By Lionel Laurent and Christian Plumb

PARIS | Tue May 7, 2013 5:16am EDT

(Reuters) - French banks Societe Generale (SOGN.PA) and Credit Agricole (CAGR.PA) vowed on Tuesday to keep cutting costs after asset sales and lending cutbacks helped to offset a weak domestic economy in the first quarter.

Banks across Europe are moving to slash spending and cut jobs in the face of tougher rules about capital levels and the uneven post-crisis economic recovery.

SocGen, France's No. 2 listed bank, said it would cut 900 million euros ($1.18 billion) in costs over the next three years in order to reach a new return-on-equity (ROE) target of 10 percent, an increase of 2.6 points.

Smaller listed rival Credit Agricole, which is more exposed to the French economy via its parent network of regional retail banks, reiterated its bid to cut 650 million euros by 2016.

While both banks suffered from shrinking group revenues, rising French loan losses and market jitters over Cyprus and Italy in the quarter, they also cut overall expenses and booked gains from selling business units in a bid to shore up solvency.

SocGen shares rose more than 4 percent. Credit Agricole gained more than 1 percent in early trade before flattening out, while the STOXX Europe 600 index .SX7P rose 1.2 percent.

"What is impressive is SocGen's capacity to cut its cost base," said Yohan Salleron, fund manager at Mandarine Gestion. "The target they announced is pretty significant."

SocGen is in talks with unions to cut 620 staff at its central back-office operations, Chief Financial Officer Philippe Heim told journalists. Reuters exclusively reported last month that the bank was considering between 600 and 700 job cuts.

Larger domestic rival BNP Paribas (BNPP.PA), Germany's Deutsche Bank (DBKGn.DE) and Switzerland's UBS (UBSN.VX) have also announced cost-saving plans to help fight the rising cost of doing business and the worsening economic outlook.

BNP leads the pack in terms of balance-sheet strength with a core Tier 1 capital ratio of 10 percent under tougher Basel III rules at end-March. Deutsche Bank has raised capital to reach 9.5 percent. SocGen expects to be at 9.5 percent by end-2013.

Credit Agricole's fell to 8.5 percent from 9.2 percent as a result of interim regulation pending Basel III, which forces banks to count insurance exposure as equivalent to equity.

Odds stacked against SocGen in Russian roulette

(Full story)

By Lionel Laurent and Matthias Blamont

PARIS | Fri Apr 26, 2013 7:07am EDT

(Reuters) - French bank Societe Generale's (SOGN.PA) estimated four billion-euro ($5.22 billion) bet on Russia must start paying off this year to stop investors urging the bank to cut its losses as the economic outlook darkens.

SocGen has for years held up its investment in Moscow-based Rosbank as a key source of future profits that will offset debt woes in Western Europe and rocky post-crisis financial markets.

Time has not been kind. SocGen has yet to deliver on the billions spent building up an 82 percent stake in Rosbank since 2006, integrating its back-office and technology platforms, shaking up management teams and cutting more than 2,500 jobs.

This year, Rosbank is expected to post a slight profit for SocGen's international retail arm after a 2 million-euro ($2.61 million) loss last year. It will be under pressure to show that this is the start of a sustainable and growing trend.

"This year they've really got to show they can provide some kind of profitability from the integration," said Espirito Santo banks analyst Andrew Lim, who believes Rosbank ideally needs to be making an annual profit of 120 million euros to prove it is on track.

"I have a net income forecast of only 50 million euros for 2013, so it is still not enough in my view," he said. "If they don't prove it this year, the natural conclusion would be to either close or sell these operations."

Deutsche Bank estimates Rosbank will make 8 million euros profit in 2013 while JPMorgan analyst Delphine Lee forecasts 18 million euros. While there is clear potential in Russia, this will be the "make or break year", she wrote in a note.

SocGen books the bulk of Rosbank's income at its international retail division. However, some Russian business including consumer-loan arm Rusfinance is booked at other divisions and is not covered by analysts' Rosbank forecasts.

Rosbank, which has a near five percent retail market share, faces a tough 2013. Russia'seconomy is weakening, loan growth is slowing and the fragmented banking market - heavily dominated by state-owned Sberbank (SBER.MM) and VTB (VTBR.MM) - has already seen a slew of foreign banks leave.

Russia recently slashed its economic growth estimate for this year by a third, to 2.4 percent.

This may make it harder for Rosbank to hit its 2015 targets, such as 25 percent growth in retail loans and 15 percent growth in corporate loans. Last year, the bank's retail loans grew 11.9 percent while corporate loans stayed flat.

Some investors see a sale as the best way out.

"There needs to be a (Rosbank) sale as soon as possible," said Frederic Rozier, fund manager at Meeschaert in Paris, which owned 0.01 percent of SocGen's outstanding share capital at end January according to Thomson Reuters data.

"These kinds of markets can deteriorate really quickly. It is not in SocGen's interest to wait if a good offer appears."

A sale of Rosbank would bring in 2.2 billion euros for SocGen, or one times book value, according to research by JPMorgan, which has estimated that SocGen has spent four billion euros building up its stake in Rosbank.

CULTURE CLASH

SocGen declined to comment for this story but has always publicly praised its Russian subsidiary's potential, seen as a key plank of Chief Executive Frederic Oudea's strategy.

"Growth in Russia is our ambition, without forgetting the fact that we still have a lot more work to do," Deputy Chief Executive Bernado Sanchez Incera said in February.

The latest big company warning French staff of cost cuts? IBM

(Full story)

PARIS | Thu Apr 18, 2013 1:35pm EDT

(Reuters) - Technology company IBM is mulling up to 1,400 job cuts in France over the next two years, three trade-union representatives told Reuters on Thursday.

IBM, a bellwether for the IT industry, is in the midst of a drive to boost profits by 2015 against an uncertain global economic backdrop.

Local management has yet to officially outline whether there will be a formal job-cuts plan approved by U.S. headquarters, the union representatives said, but said the numbers had already been communicated.

"Management is set to present a plan to cut between 1,200 and 1,400 staff over the next two years," said Pierry Poquet, secretary general of the UNSA union, who said a meeting was planned for April 25.

"For now it is only a target...we've heard such announcements before but they don't always come to pass."

The CFE-CGC union's representative, Evelyne Heurtaux, confirmed the figures. "We've been told a figure of around 1,300 jobs cut over two years," she said.

IBM currently employs around 8,000 people in France, Heurtaux said.

An IBM spokeswoman could not be reached for comment.

(Reporting by Lionel Laurent and Gilles Guillaume; Editing by Elaine Hardcastle)

BNP Paribas criticised over Africa client controls, internal report says

(Full story)

By Lionel Laurent

PARIS, April 17 (Reuters) - French bank BNP Paribas exercised poor controls over "high-risk" African clients and potentially illicit activity at its private bank in Monaco, according to an internal report seen by Reuters.

News of the confidential report, handed to top managers in October, 201l, comes as regulators across the world crack down on money laundering and tax evasion.

BNP, France's biggest bank by market value, has since closed the "few dozen" accounts involved and toughened risk controls to avoid "irregularities" in the future, a spokeswoman said.

Paris-based advocacy group Sherpa, which separately obtained the report, called on prosecutors to open an inquiry into its findings. BNP's spokeswoman declined to comment further.

The report alleges that "many" Madagascar residents seek to escape foreign-exchange regulations by accepting or exchanging euro-denominated cheques in lieu of local currency, building up an illicit money chain of cheques that passes back through Europe.

The inquiry analysed the activity of dozens of Madagascar accounts at BNP's private bank in Monaco between January 2008 and July 2011 and found high cheque volumes.

One account, belonging to a freelance salesman for the bank, received approximately 10 million euros ($13.1 million) via hundreds of cheques and passed the money to other accounts at BNP or to other banks in countries such as Switzerland, Belgium and China.

"It appears that the bank is not entirely in control of the back-end of financial transactions that may be in breach of regulations in the clients' country of residence," according to the report, which was passed to managers including Deputy Chief Operating Officer Jacques d'Estais.

"The way these accounts are used does not correspond to the activity of a private bank and generates high risks for the bank because of the weakness of the compliance framework that governs their oversight."

The account was frozen in June 2011 and BNP instructed the salesman that it would no longer accept any cheques, the report said.

French bank rediscovers the internet

(Full story)

By Lionel Laurent and Alexandre Boksenbaum-Granier

PARIS, April 10 (Reuters) - French bank BNP Paribas is set to open a new online bank targeting 500,000 customers in five years as it revamps itsretail activities, two union sources told Reuters on Wednesday.

BNP and its rival Societe Generale are cutting costs in their branch networks, where a stagnant economy and consumer belt-tightening have hit revenues and raised the likelihood of branch closures.

Although France's biggest bank already offers online banking for its regular retail customers, the new project will be entirely digital, the sources said. French daily Les Echos, which reported the plan on Wednesday, said the new brand might be called "Hello Bank".

The project has a target of 25,000 customers by the end of 2013, one of the union sources said.

"25,000 clients by the end of this year and 500,000 in five years," he said, citing discussions held with BNP's management. "This is what we have been told."

A BNP spokeswoman declined to comment.

Exclusive: SocGen mulling up to 700 job cuts, sources say

(Full story)

By Lionel Laurent and Matthias Blamont

PARIS | Fri Apr 5, 2013 1:04pm EDT

(Reuters) - French bank Societe Generale (SOGN.PA) may cut between 600 and 700 jobs as part of a broader cost-cutting drive in the face of stagnant growth in its home market, three union sources told Reuters on Friday.

SocGen management met with unions on Wednesday to discuss the proposals, which have not yet been finalized, the sources said.

The cuts, which will largely target back office staff in IT and compliance roles, will be partly offset by up to 100 new jobs created elsewhere, they added.

"There will be 600 to 700 job cuts at SocGen's central offices," one of the sources said. "Nothing is finalized but the proposals are fairly advanced."

SocGen employs 154,000 people worldwide, with 8,340 in its central administration department.

A SocGen spokeswoman said the bank would seek to avoid forced layoffs and that it was "premature" to discuss reorganization plans when they had not been finalized.

She added that SocGen would favor internal redeployment and voluntary departures where there was the need to cut staff.

CGT union representative Michel Marchet said management had presented "several" different projects and that final numbers would not be revealed until the end of 2013.

"There was a meeting, management presented a number of proposals," said Marchet.

SocGen pledged in February to cut costs over the next three years with a reshuffled management team and promised to put in place a revamped structure, without giving numbers or targets.