France's new conservative government plans to privatize five state-owned banks, attracting more international investors to the Paris stock exchange.
The government said last week that it will sell its stakes in two of the world's largest banks, Banque Nationale de Paris and Credit Lyonnais.
Banque Nationale is expected to be put up for sale in October, and Credit Lyonnais toward the end of next year. Two medium-size regional banks, Banque Hervet and Societe Marseillaise de Credit, will also be sold, probably next year.
The government is the majority owner of the four banks.
The government also plans to sell 30% of Credit Local de France this month.
Little Difficulty Anticipated
Analysts expect the government to have little difficulty selling the banks.
"It'll probably be easier to sell banks than other institutions since improving real estate and falling interest rates will help banks' results," said Pierre Flabbee, an analyst with Paribas Capital Markets. "Banks should lead any economic rebound."
This is the second round of sales by France of banks nationalized by the Socialist government a decade ago.
Over the period 1986-89, the government sold Societe Generale, Banque Paribas, and Banque IndoSuez, among others.
But this time, the government will not impose restrictions on foreign ownership. In the earlier round, total foreign investment in a bank was limited to 20%. However, the government will retain a "golden share," allowing it to veto investors it deems to be against French interests.
U.S. Participation Increasing
Foreign investors own 20% to 25% of the bank shares traded on the Paris stock exchange.
The sales come when U.S. institutions are increasing their investments in foreign banks.
General Electric Capital Corp. for example, acquired a 1.5% stake in Spain's Banco Bilbao Vizcaya last year.
Another U.S. investment fund, Corsair Partnership, is seeking to acquire shares in another Spanish bank, Banco Espanol de Credito. The fund, managed by J.P. Morgan & Co., was set up to acquire stakes in banks overseas.
France is one of several countries selling financial corporations to reduce budget deficits and prepare the institutions for international competition.
Mexico last year completed the sale of 18 state-owned banks. Italy, Belgium, and Israel are planning to privatize government-owned banks. India has been gradually allowing a private banking sector to expand alongside the state-run system.
Analysts said they expect France to raise between $725 million and $900 million from the Credit Local sale. It holds 25% and a state-owned financial institution has another 25%. The bank was partially privatized several years ago.
They estimated the sale of the government's 73% stake in Banque Nationale should raise between $5 billion and $5.8 billion and its 63% stake in Credit Lyonnais around $2.7 billion.For SaleBanks that France plansto privatizeBANQUE NATIONALE DE PARISAssets $275 billionBranches 2,368Ownership French government, 73% Union des Assurances de Paris, 10% Public, 17%CREDIT LYONNAISAssets $306 billionBranches 2,311Ownership French government, 63% Thomson CSF, 10% Public, 22%CREDIT LOCAL DE FRANCEAssets $51 billionBranches 1Ownership French government, 25% Caisse des Depots et Consignations, 25% Institutional investors, 25% Public, 25%SOCIETE MARSEILLAISE DE CREDITAssets $4.5 billionBranches 186Ownership French government, 100%BANQUE HERVETAssets $3.2 billionBranches 67Ownership French government, 66% Credit Commercial de France, 34%Assets as of yearend 1991Source: American Banker,French Association of Banks