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."