The French government has finally nationalised the Credit Immobilier de France which has been weakened by a liquidity crisis and a failure in the search for a buyer since May. “To allow the CIF group to respect its overall commitments, the state decided to respond favourably to its request to grant it a guarantee” said Finance Minister Pierre Moscovici on September 1st. The country would provide a 20 billion euro guarantee without spending taxpayer money.
However, the bailout is still subject to the approval of the European Commission. Prime Minister Jean-Marc Ayrault has reassured French citizens saying in a radio interview that, “The state has taken its responsibilities to provide a guarantee, but as this bank has its own capital, the money of taxpayers won’t be called upon”. In order to respect one of the state conditions, CIF will not be authorised to make new loans anymore.
At the moment economic analysts think that the government will drastically slow down the mortgage lender’s activities instead of searching for a buyer. On Tuesday, Moody’s cut CIF’s credit rating citing that it would be placed into a run-off scenario rather than being rescued. The ranking agency said a “run-off scenario is probably not the preferred solution of the French government due to the importance of the bank’s lending activities to the French housing market, especially in assisting less privileged households”.
Last week, Claude Sadoun, CIF’s Chief Executive Officer has resigned before being replaced by Bernard Sevez, head of a French social housing group. Meanwhile, French government expects Claude Sadoun to renounce to his severance payments of 1.5 million euro.
The government’s intervention comes just after the rescue of the Franco-Belgian Dexia bank in October 2011. This is the latest problem that President Francois Hollande has had to face after the recent mass layoffs operated by Peugeot and Carrefour supermarkets.
These changes also affect Banque Patrimoine et Immobilier who are a key player in the non-resident mortgage market. Effectively, BPI will have to cease new lending which means no new offers will be issued. All existing offers will be honoured but any clients who are in the process of applying had better look elsewhere (French mortgage best buys). This is certainly a blow for the French mortgage market for overseas borrowers as BPI were a major player in keeping the others competitive. With less competition in the market we are likely to see bank margins remain the stable or perhaps increase. On a positive note we are experience the lowest French mortgage rates since the second World War.
However, the bailout is still subject to the approval of the European Commission. Prime Minister Jean-Marc Ayrault has reassured French citizens saying in a radio interview that, “The state has taken its responsibilities to provide a guarantee, but as this bank has its own capital, the money of taxpayers won’t be called upon”. In order to respect one of the state conditions, CIF will not be authorised to make new loans anymore.
At the moment economic analysts think that the government will drastically slow down the mortgage lender’s activities instead of searching for a buyer. On Tuesday, Moody’s cut CIF’s credit rating citing that it would be placed into a run-off scenario rather than being rescued. The ranking agency said a “run-off scenario is probably not the preferred solution of the French government due to the importance of the bank’s lending activities to the French housing market, especially in assisting less privileged households”.
Last week, Claude Sadoun, CIF’s Chief Executive Officer has resigned before being replaced by Bernard Sevez, head of a French social housing group. Meanwhile, French government expects Claude Sadoun to renounce to his severance payments of 1.5 million euro.
The government’s intervention comes just after the rescue of the Franco-Belgian Dexia bank in October 2011. This is the latest problem that President Francois Hollande has had to face after the recent mass layoffs operated by Peugeot and Carrefour supermarkets.
These changes also affect Banque Patrimoine et Immobilier who are a key player in the non-resident mortgage market. Effectively, BPI will have to cease new lending which means no new offers will be issued. All existing offers will be honoured but any clients who are in the process of applying had better look elsewhere (French mortgage best buys). This is certainly a blow for the French mortgage market for overseas borrowers as BPI were a major player in keeping the others competitive. With less competition in the market we are likely to see bank margins remain the stable or perhaps increase. On a positive note we are experience the lowest French mortgage rates since the second World War.
.jpg)
Posts
0 comments:
Post a Comment