A French Financial Agency Plans Big Expansion in U.S.
NEW YORK - Credit Local de France, a government-owned municipal finance agency, plans to extend about $350 million in loans and loan guarantees in the United States for each of the next two years.
Pierre Richard, Credit Local's chairman, said in a recent interview that the agency wants to increase its U.S. business to 5% of its new committments.
Building on Its Total
Credit Local, which has $40 billion in total assets, opened the New York agency at the end of last year. The U.S. agency had about $200 million in loans, loan guarantees, and standby bond purchase agreements at the end of July.
Remy Cyssau, senior vice president for international development at Credit Local in Paris, said the New York addition is part of a broader effort to develop business in the United States and Europe.
Mr. Cyssau acknowledged that the agency is not well known in the United States, but added that Credit Local hoped to use its strong credit rating and experience in municipal lending in France to grow.
Ratings Are Highest
The state-owned agency is rated triple-A by both Moody's Investors Service Inc. and Standard & Poor's Corp.
The French agency is one of several European institutions seeking to use their higher ratings to build up business in the United States.
Another French bank, Credit Agricole, is considering entering the market for municipal letters of credit.
"The capital treatment is extremely attractive," said Ian Reece, head of corporate banking for Credit Agricole in New York.
Mr. Reece noted that banks are obliged to set aside capital to cover only 20% of the amount they guarantee on a municipal bond issue, compared with up to 100% for many loans.
Banking sources said Barclays Bank PLC was also planning to enter the market. Executives of the London-based banking company could not be reached for comment.