Mini-moi

13 March 2006 By Edward Hadas

The deal has to overcome opposition from the Caisses biggest shareholder, the CDC. But bulking up makes economic sense, Two mutual banks Caisses d Epargne and Banques Populaires want to merge their wholesale operations into a E25bn listed company.

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Two French mutual bank groups, Caisses d'Epargne and Banques Populaires, announced on Monday their intention to create a new wholesale bank, to be called Natixis. The groups announced a deadline of June 1 for the completition of negotiations. Each group would own an identical 34% of Natixis. The public is expected to own a minimum of 25% of outstanding shares.

The central holding company of the Banque Populaire group (the Banque Federale des Banques Populaires) already own 76% of the quoted company Natexis, which runs the group's wholesale operations, including the design of investment products for retail customers. The central holding company of the Caisses d'Epargne (the Caisse Nationale des Caisses d'Epargne) owns all of Ixis, a broadly similar operation. These two operations would be the main assets of Natixis. In addition, the holding companies may contribute shareholdings in the retail banks or cash in order to ensure equal economic interests.

The two holding companies also plan to arrange crossshareholdings. The retail operations, however, would remain separate.

The Caisse de Depots et Consignations (CDC), an agency of the French government, owns 35% of the Caisse d'Epargne holding company and has a veto right over the transaction. It has announced its opposition.

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