La Poste: Bigger Share of Banking Business

In French banking, La Poste (F.PST) – the national post office – has always been a force to be reckoned with. It has a 10% slice of the retail market and 15% of all checking accounts, putting it ahead of better-known rivals BNP-Paribas SA (F.BNP) and Societe Generale SA (F.SGF). But it also has a severe handicap: It has no banking license. Without one, it can’t lend money. And that is costing market share in important areas. Trouble is, handing La Poste a banking license would mean changing the law that first created it and now mandates the services it must provide. Doing that would raise fierce opposition, not just from politicians and trade unionists who want to keep La Poste firmly in the public but from private sector banks who don’t want the extra competition. Despite the opposition, signs are changing La Poste’s statute is not the taboo it once was.” The French government wants La Poste to play a fuller part in the ongoing shakeout of France’s mutual and public banks, Clow says. “Trouble is, La Poste is still seen as a distributor of financial products rather than a producer of them. To start producing financial products of its own, La Poste would have to alter its status and become a fully-fledged bank, subject – like other banks in France – to French banking laws. Supporters of reform say it should. What’s more they say La Poste could spin off its financial services arm completely and list shares on the bourse as its German and Dutch counterparts have. Opponents say that would spell the end of La Poste as a true public service company. Importantly, becoming a bank would enable La Poste to offer loans for things like cars and consumer goods, something that would help it hang on to its younger customers. At the moment, La Poste has an impressive 15% slice of the 15-year-olds market. By the age of 25 though, its share is down to a meager 3% as young people look to borrow money elsewhere. Even more importantly, spinning off its financial services – and listing them – would also give La Poste access to capital market and to the cash it needs to compete with other banks in France and, conceivably, beyond,” the Dow Jones article states.