France

France and Italy sitting on share sale goldmine

29 September 2011

The halting of Spain’s giant lotto IPO doesn’t change the logic of further asset sales by euro zone members with high debt. It’s not just the peripheral countries. France alone could plausibly raise $50 bln from trimming its holdings.

Qatar risks a foreign investment pile-up

19 September 2011

The gas-rich state might have around $100 bln to throw at foreign assets, based on guesses at the size of its sovereign fund. A 7.5 pct stake in Franco-German EADS would cost less than $2 bln. But Qatar’s overseas spending doesn’t look as focused as its domestic growth ambitions.

BNP steps into leaner future with asset sale plan

14 September 2011

BNP Paribas is offloading 10 percent of its risk-weighted assets. The euro zone’s largest bank may be strong enough to withstand further write-downs. But this summer’s U.S. funding market strains and market sell-off show it must do more to protect itself.

French bank meltdown begs for government action

12 September 2011

SocGen’s plan to dump assets and staff to soothe investors’ concerns couldn’t prevent a meltdown of French banking shares. The government says talk of nationalisation is “premature”. But with another downgrade looming, it might have to step in to avoid a panic.

French banks’ funding flames fuelled by Basel

9 September 2011

SocGen and BNP are telling investors their funding is secure, despite the pull-back by U.S. money market funds. But tough Basel liquidity requirements would force them to issue stacks of pricier debt, shrinking returns. Unless the rules are relaxed, the banks’ woes will persist.

Dexia sued for rare thing it can’t be blamed

8 September 2011

The Belgian-French bank is being sued by some French local authorities after loans pegged to the strong Swiss franc soared in cost. Dexia may escape the blame for what looks a case of caveat borrower. Its real problems are its messy funding, and sovereign debt exposure.

Taxing the rich makes economic sense

25 August 2011

Western governments want the rich to contribute more to their austerity drives. Financially, it won’t do much to cut deficits and debts. But after three years of economic tension, it is a crucial part of making new rounds of tightening politically acceptable. Pain must be shared.

Merkel and Sarkozy live down to low expectations

17 August 2011

The Franco-German summit produced proposals for further euro zone integration. But the demand for balanced budgets was unmatched by any promise of more aid for peripheral states, while the mooted tax on financial transactions misses the point. Investors are rightly sceptical.

Balanced budget laws are flawed but not useless

16 August 2011

Sarkozy and Merkel like them, and they feature in America, too. But politicians often fudge the numbers, or just change the rules. Nonetheless, in reasonably honest systems such laws slow the build-up of deficits. Perhaps as importantly, they also stigmatize bad behavior.

Euro bailout fund could survive French downgrade

15 August 2011

France’s triple-A rating is the weak link in the soon-to-be-expanded European Financial Stability Facility. A downgrade would almost certainly dent the rescue fund’s top rating, pushing up borrowing costs for bailed-out countries. But this need not be a disaster.

Split EU regulators weakened by dubious short ban

12 August 2011

Without the cover of European unanimity, countries that imposed short-selling curbs have made it look like they have something real to worry about. Bank shares are still gyrating - hardly evidence of a more stable market. Watchdogs risk suffering a hit to credibility.

France needs resolve to avoid losing triple-A

11 August 2011

Debt and the deficit are high, regardless of the cost of euro zone bailouts. France has a tough plan. But extra measures, like reforming local government and removing VAT exemptions, are needed. Regrettably, as in the U.S., there are political obstacles and an election looms.

Central banks at the limits

10 August 2011

QE or not QE? Fears of renewed global recession come as central bankers seem short of options. Money printing carries big risks, and failed currency interventions add to the impression of impotence. The radical solutions are there. But they might be better kept locked away.

ECB’s bazooka has a limited shelf life

8 August 2011

The central bank’s decision to buy Italian and Spanish bonds has calmed investors’ nerves. But the ECB is only buying time until the euro zone governments’ bailout facility is ready to step in. And the repercussions of Friday’s U.S. ratings downgrade could limit future rescues.

SocGen back to earth with profit warning shocker

3 August 2011

The French bank has admitted it probably won’t make its optimistic 6 bln euro net profit target next year. This may reflect slowing revenue rather than its exposure to euro zone contagion. But with markets already jittery, the warning could hardly have come at a worse time.