Postman knocks on Societe Generale's door
Launched barely two years ago, the Banque Postale – the new banking subsidiary of the French post office – has been actively looking for partners to help it become a fully-fledged retail bank and in due course be partially privatised. And by an odd coincidence, only a couple of weeks ago it forged its first partnership with a big French commercial bank forming a joint electronic payments venture with none other than SocGen.
The joint venture and the colossal crisis that has erupted at SocGen are unrelated. But it does suggest that government- endorsed efforts to make the postal bank more efficient and competitive were starting to bear fruit. Indeed, a year or so ago, a French senate committee recommended the postal bank seek partnerships with commercial rivals, in particular SocGen.
Although the newcomer can boast to be the largest bank in the country by numbers of customers (29.3m) and branch network, its overall level of services and banking operations significantly lag behind the country’s other banks, not only the big commercial groups, but also the large mutuals. But by far the biggest problem facing the postal bank is the threat of losing its joint distribution monopoly along with the Caisse d’Epargne savings bank of France’s popular Livret “A” tax-free savings account scheme held by some 45m small savers.
The country’s commercial banks and other mutuals have been campaigning against this monopoly held by their new postal competitor. The European Union also ordered the French government last year to end this distribution monopoly. And although Paris is still appealing the Brussels ruling, François Fillon, France’s prime minister, announced just before Christmas that distribution of the Livret “A” will be opened to all French banks by the end of this year or early next year. The decision will be included in an economic modernisation bill to be presented by the government in a few months’ time.
With its sinecure threatened, pressure has been mounting on the postal bank to accelerate its transformation into a modern competitive bank. And now some politicians and government officials are beginning to think that the SocGen crisis could perhaps provide an unexpected opportunity to resolve both the postal bank’s problems and defend the risk of SocGen falling prey to undesirable foreign competitors or indeed its domestic arch-rival BNP Paribas.
The general idea would be for the postal bank to take a large stake in SocGen together with other traditional French institutions such as the Caisse des Dépôts and Axa, the insurer. Crédit Agricole will probably try to muscle into this party with the aim of trying to pick up SocGen’s investment banking arm. And BNP will clearly also try to get its foot into the SocGen door, seeking its retail operations.
But bringing the postal bank and SocGen closer together would follow the traditional model of French state intervention in defence of its corporate champions. It would partially privatise the postal bank at the same time as partially nationalise SocGen in the same way as it is doing with Gaz de France and Suez through a state orchestrated energy mega-merger. It would be a masterpiece of Cartesian corporate logic and, of course, keep nosey foreigners at bay.
As for the postal bank, it already seems to think its troubled commercial rival is an alluring prospect since it holds some 2.1m SocGen shares in its asset management arm.
