Tag: France

La Poste, the French post office, has 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.

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.

French banks are resisting plans by the state-run post office to extend its financial services products.The chairmen of Frances three largest listed banks, Crédit Agricole, BNP Paribas and Société Générale visited Francis Mer, the finance minister, last week to voice their opposition to plans by La Poste to market stand-alone mortgages through its network of more than 17,000 offices. Under its current statutes, the post office can only offer mortgages to holders of special property-linked saving schemes.

La Poste, the French state postal service operator, is coming under increasing pressure to modernise, reduce costs and debts, and improve services in the face of increasing competition from rivals using new technologies. Currently, the company’s debt amounts to 2.4 times its equity capital, excluding off-balance-sheet items, and its turnover is showing only sluggish growth.