French Post Office faces split to diversify
France is considering splitting La Poste in two, in exchange for approving the state-run post offices plans to widen the financial services it offers. The plan comes at a delicate time for the post office, which is facing increasing foreign competition as a result of the gradual pan-European deregulation of postal services. This week, the Cour des Comptes, Frances national accounts auditor, is expected to issue a warning that La Poste might not survive deregulation unless it reduces costs and increases productivity by 2009, when all national barriers will be removed.
Government officials said last week the creation of a standalone financial entity, to be run separately from the postal service, might allay commercial bankers fears that La Poste benefits from an unfair competitive advantage owing to its ownership structure. La Poste is the only remaining state-owned financial services provider since Caisse des Dépôts et Consignations, another public-sector bank, agreed to sell its retail and investment banking operations to Caisse d’Epargne, a mutually owned savings bank.
Earlier this month, the chairmen of the three largest French banks – BNP Paribas, Crédit Agricole and Société Générale – took the rare step of meeting Francis Mer, the finance minister, face-to-face to argue their case against an extension of La Poste’s financial services.
Jean-Paul Bailly, chairman of La Poste, claimed that diversification into financial services is the only way to continue funding the extensive network of post offices in a climate of increasing pressure on the prices of its post delivery business.
The post office, whose network of 17,000 branches is more than twice as large as its nearest competitor’s, is allowed to offer only a limited number of financial services. These include current and savings accounts, life insurance and a few highly regulated mortgages.
As part of its next five-year plan, to be agreed with the government this week, La Poste is seeking to be allowed to distribute all types of mortgages. It also wishes to start marketing general insurance products and consumer loans.
In an interview last week with French daily Les Echos, Daniel Bouton, chairman of SocGen, described claims that diversification would protect jobs as “hypocrisy’. He said: “Not many of La Poste’s employees will become bankers- In the long term, it is inevitable that the postal bank will be privatised.’
The commercial banks, backed by their trade body, Fédération Bancaire Française, are threatening to complain to Brussels about La Poste’s “uncompetitive behaviour’ if its diversification plans are approved.
Another compromise that the government is said to be contemplating is to allow La Poste to offer mortgages, but postpone by several years its authorisation to offer consumer loans and non-life insurance contracts.
JP Morgan is advising La Poste on its diversification plans.
