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The Carrot Comes After the Stick for French Banks

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A law passed against the banks

The day after the Law on the separation and regulation of banking activities in France was adopted, the major directors of the French banks held an interview with President Francois Holland. This meeting was a great success for Offshore English banks that saw their market shares increase to the dismay of French banks.
The main repercussions of adopting the law were as follows:

– The legal separation of the activities of deposit and investment through the creation of a subsidiary for each bank dedicated to investments and prohibited from using savings funds.

– The obligation to establish a fund to resolve their financial difficulties themselves.

– Much tighter measures in terms of information; with tax havens and excessive compensation in the government’s firing line.

Pocket money to cover losses

If the adoption of this law increased tension between the banking sector and government; the meeting with the French president, and particularly his promises for recapitalization to the height of 30 billion euros, has certainly relaxed the atmosphere. Especially since these funds were promised in the understanding that refinancing for SMEs will be resumed, with an additional bonus of 20 billion euros.

Sooner or later, France is going to have to leave the initiative to the banks

This policy’s adherence to the promised objective to “resume control of the banking system” ; so that it can serve the economy and not have the economy serve it, will not be without consequences. Given that some people already feel that their freedom has been restricted; according to some French bank directors, the Bank bashing must stop so that we can get on with business.

The statement is real; because notwithstanding the “gift” of the French government regarding the potential 50 billion; French banks are in a situation which could be summarized by “much less money for increasing needs”. As “engines of the economy” banks will play an essential role when the economy resumes.


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