French Banks Close Ranks on La Poste

The imminent expansion of financial services offered by French post office La Poste continues to ruffle the feathers of the country’s more established banking players. Earlier this month, Societe Generale chairman Daniel Bouton said that he could see “no economic sense” in permitting La Poste to broaden its range of banking products. His remarks follow similar comments made earlier this year by Michel Pebereau, chairman of BNP Paribas. Speaking on French radio, Pebereau said that he had urged the French authorities not to “turn the French banking sector upside down” by adding another competitor to an already crowded marketplace. La Poste is about to sign a new five-year operating agreement with the French Finance Ministry, which – if ratified – will allow it to offer customers consumer credit and non-life insurance products – areas that have previously been off-limits. A decision is expected later this year. La Poste already offers current and savings accounts, home loans, investment and life insurance products. It claims to be the number three player in the French retail banking market, managing 45 million accounts for 28 million customers. Its major asset is its extensive network of over 17,000 outlets, which it claims is “the most far- reaching and dense local service network in Europe.” The major French banks are against the expansion of La Poste’s services, arguing that the market does not need another supplier and that competition with the state-owned post office would not be on a level playing field. The French central bank also opposes the move on the grounds that it would destabilise the banking sector. The move is necessary, say senior executives at La Poste, if the French post office is to compete effectively when the courier sector is deregulated in 2006. La Poste currently derives around 23 percent of turnover (E4.0 billion in 2002) from financial services. Meanwhile Credit Agricole has complained publicly about the quality and cost of services offered by La Poste and threatened to take its E234 million postage requirements elsewhere. It has made enquiries about the prices charged by Dutch and German postal services and said it is considering sending bank statements via email, rather than by post.