Analysis of a recent financial/economic event of your choice to illustrate and substantiate the knowledge you have acquired over the last three months

Résumé du document

The French banking industry has been in the restructuring phase for about five years now. The year 2006 gave the markets another example of this trend. The banking industry will have to deal with a new corporate and investment bank, which is being created by joining units from the Banque Populaire group and Caisse d'Epargne group. Although the stock market had to face the paranoia of the government concerning hostile takeovers, such as Mittal with Arcelor or the attempt to protect Suez from an Italian takeover, the banking system has succeeded in convincing the stock market regulatory body to accept such a big operation between two of France's biggest mutual banks. The arrival of Natixis, the French corporate and investment bank, seems therefore to illustrate both the relationship between the financial world and the institutional regulation bodies, and the global trend of a greater concentration of banks in France. I chose the recent merger of the two banks to create Natixis in order to illustrate the fluctuating relationship between the financial world and institutional regulation bodies such as the Authorite des Marches Financiers or the AMF or even the state, through its stakes in some funds, like the Caisse des Dépôts.

Extraits

[...] Both french banks have an extraordinary retail market penetration and consequently aim at achieving a 10% annual revenue growth from 2005 to 2010 On the other hand, this market penetration has been so far “underexploited” says the financial times. One should also take into account the lattest disappointments concerning costs synergies, such as the example of Citygroup or Morgan Stanley Dean Witter. Although Natixis has planned to double its number of employees abroad to 3000 in 2010, there is still a huge gap step to take before this bank truly builds a credible business abroad. Natixis generated 2,5bn from overseas activities last year, or slightly more than 40% of its total revenues. [...]

[...] Indeed, both Banques Populaires and Caisse d'Epargne would have a 34% stake in Natixis. It would become the second-largest retailer of financial services behind Crédit Agricole SA, and eventually rank fourth in terms of french bank market capitalization, far behind BNP Paribas SA for instance. Natixis is expected to have a market capitalization of about 25bn ranking in the top 20 of the CAC-40 Index of blue-chip companies Natixis is therefore to become a bank with strong assets and major synergies but some improvements have still to be done of profits will come from French retail banking; through its stakes in the regional networks of its two big shareholders (Natixis also has 20 stakes in both groups through CCI). [...]

[...] He also said it would seriously damage the interests of the Caisse d'Epargne and its shareholders, and finally he explained that he was disappointed not being consulted over the negociations. This state-owned institutional investment arm finally accepted to sell its 35% stake in the Caisse d'Epargne for 7 billion and made possible a merger of the corporate banking. In my opinion, this first obstacle the two banks had to overcome perfectly illustrates the interference of institutional bodies into the financial world. [...]

[...] The merger between the Banque populaire group and the Caisse d'Epargne has been a major financial operation of the last year, but very surprisingly, only the specialized press such as La Tribune or Les Echos have talked about this. It seems to me like one of the most important economic event of the past year, partly because it illustrates the clear trend of the French banking concentration process. And finally I would to insist on the fact that the creation of Natixis shows the growing importance of regulatory bodies such as the AMF in takeovers or mergers, and the interference of the political field in the financial world. [...]

[...] Analysis of a recent financial/economic event of your choice to illustrate and substantiate the knowledge you have acquired over the last three months The French banking industry has been restructuring for about five years and 2006 gave the markets another example of this trend. The banking's industry landscapes should know have to deal with a new corporate and investment bank, being created by joining units from group Banque Populaire and group Caisse d'Epargne. Although the stock market had to face the paranoia of the gorvernment concerning hostile take-overs, such as Mittal with Arcelor or the attempt to protect Suez from an Italian take- over, the banking system has succeeded in convincing the stock market regulatory body (the AMF) to accept such a big operation between two of France's biggest mutual banks. [...]