Brussels launches French probe into savings banks
The European Commission yesterday reignited its long-running feud with France over alleged illegal subsidies and unfair advantages granted to the country’s savings banks.
The Brussels-based regulator suspects the French government could have violated European Union rules in its dealings with Credit Mutuel, La Poste and Caisse d’Epargne – the three lenders allowed to distribute popular, state-subsidised savings books known as Livret A and Livret Bleu. It has launched a formal probe into the matter.
An inquiry will be a boost for the group of rival French banks – including Societe Generale, BNP Paribas, Credit Agricole and Banque Populaire – which have spent years trying to break what they claim is an unfair oligopoly among the savings banks.
Credit Agricole, the most vocal critic of the savings book schemes, yesterday welcomed the inquiry and called on the French government to start talks on opening the scheme to all French banks.
The Commission said it would “examine the costs and the revenues associated with the distribution of the Livret Bleu”, in order to determine whether there has been over-compensation for the service provided by Credit Mutuel to the state from 1991 to 2005.
It added that any such “over-compensation” could be seen as illegal state aid, meaning the mutually-owned lender would be liable to make repayments. The Commission said it had also launched a legal challenge against the French government for granting the three lenders the exclusive right to distribute the Livret A and Livret Bleu.
Created in 1818, the Livret A is the foundation of the French savings system. It is held by three-quarters of the country’s population and accounts for almost 20 per cent of French savings, in spite of competition from more sophisticated life and investment products.
French parents traditionally open Livret A accounts for their new-born children, attracted by its tax-exempt 2.25 per cent return on savings up to Euros 15,300 (Dollars 19,600).
Deposits are channelled through the Caisse des Depots et Consignations, a state bank, to fund cheap social housing.
Brussels said it had sent a so-called letter of formal notice to Paris – the first step in an infringement procedure that could ultimately lead to France being hauled before the European Court of Justice for breaking EU law.
Neelie Kroes, the EU competition commissioner, said: “Both sets of proceedings should be seen in the context of the Commission’s efforts to increase competition and widen consumer choice in the financial services sector.”
The Commission already ruled in 2002 that Credit Mutuel had received illegal state in return for distributing the Livret Bleu – but its decision was subsequently overturned in the European courts.
