La Poste wins entry to mortgage market
La Poste, the French post office, last night received government approval for a limited expansion into financial services despite vigorous lobbying by French banks opposed to the move, French business paper Les Echos reports.
Nicole Fontaine, the industry minister, said La Poste would be authorised to begin offering mortgages to individuals buying homes, without the need to set up a savings plan, from 2005. However, requests by La Poste to begin offering disaster insurance and consumer credit were rejected by the government. Its application to enter the consumer credit market will be reviewed again in 2006.
The authorisation to become a mortgage lender is nonetheless a breakthrough for La Poste, which is keen to expand into financial services to counterbalance growing competition in its core business of mail delivery.
It was won despite fierce opposition from the banking sector. The chairmen of France’s three biggest banks – René Carron of Crédit Agricole, Michel Pébereau of BNP Paribas and Daniel Bouton of Société Générale – met finance minister Francis Mer on October 8 to express their opposition.
The entry of La Poste into the mortgage market, with its massive branch network and powerful rural franchise, could send a shockwave through the mortgage sector.
But in order to compete, Ms Fontaine said La Poste would have to set up a separate “postal credit establishment” bringing together its financial service activities, including mortgage lending.
Its activities, according to the finance ministry, will closely resemble those of a postal bank. “Its creation will enable La Poste to achieve a more efficient management of its balance sheet,” said Ms Fontaine.
The lending will be supervised by the Comité des Etablissements de Crédit et des Entreprises d’Investissement. La Poste is being advised on its financial services strategy by investment bank JP Morgan.
