European insurer dividend angst looks overdone 21 Feb 2013 Allianz and AXA have respectively held and increased their dividends, a day after UK rival RSA cut its own. While all insurers are battling low investment yields, the larger players have more room for manoeuvre. The same logic should apply to the payout of fellow big beast Aviva.
Credit Agricole should finish what it has started 20 Feb 2013 The French lender has booked a 6.5 billion euro annual loss after disposals, goodwill writedowns, and a last-minute tax bill. The pain is worth it if this is the end of an ill-thought European expansion. But Credit Agricole may need to offload its Italian arm as well.
Simpler not necessarily better for Natixis 18 Feb 2013 The French investment bank is restructuring its relationship with cooperative bank shareholder BPCE. The 2 bln euro dividend this enables has pushed the shares up 18 pct. But investors may in future assign a lower multiple to Natixis’s more wholesale-focused earnings.
BNP should shape up or ship out in Italy 14 Feb 2013 France’s largest bank is focusing on cuts in slow-growth areas like Europe and growing revenues in Asia. Then it may want to review its Italian strategy. Buying the ailing Monte dei Paschi would be a ballsy option. But BNP could also exit the country altogether.
Record losses aren’t the end of sad Peugeot story 13 Feb 2013 Investors seemed to take the French carmaker’s 5 bln euro record loss in their stride. The group exceeded its cost reduction goals and pointed to huge cash buffers. But its plan still depends on the optimistic view that the car market will stabilise at last.
SocGen short of options to solve biggest problem 13 Feb 2013 The French bank is improving its capital and the threats from potentially strict regulation have receded. But even after it restructures its business into three key pillars, returns in 2015 will remain below the current cost of equity. And more radical solutions offer no panacea.
Peugeot’s writedown shocker isn’t end of trouble 8 Feb 2013 The struggling French carmaker is slashing the book value of its plants by more than 4 bln euros. This is partly due to new accounting guidelines, but the company’s outlook remains bleak. If its turnaround doesn’t materialise, the family group may soon need a bailout.
Corporate governance: EADS 1 – France 0 6 Feb 2013 The French government couldn’t appoint its preferred candidate, Anne Lauvergeon, to the Airbus maker’s top spot. Instead, former Thales CEO Denis Ranque will get the job. EADS reformed governance after its failed merger with BAE. The new system seems to be working.
Hollande adds to currency wars cacophony 5 Feb 2013 The French president fears that the euro’s strength against other currencies threatens economic reforms. He suggests setting a medium-term target for the common currency’s exchange rate. This puts him at odds with the ECB and with Germany - a bad idea in itself.
Renault job cuts test France’s industry fetishism 16 Jan 2013 The French carmaker is to shed 14 pct of staff in its home market in one of the worst slumps in decades. Workers that keep their jobs face pay cuts. Pressure on costs will be pervasive. This will hurt in a country that remains fixated on industry as a symbol of economic might.
M&A machines can’t live off debt forever 14 Jan 2013 Privately held Ardagh has grown sevenfold since 2007 through deals bankrolled by high-yield investors. Now the Irish packager is buying a Saint-Gobain unit for $1.7 bln. Debt-funded M&A sprees needn’t end in tears. But Ardagh will one day need the support of equity investors too.
Spurned by Belgium, LVMH boss can still try Russia 11 Jan 2013 Some countries have standards. Bernard Arnault may not meet Belgium’s and that country could deny him citizenship. If the billionaire boss of luxury giant LVMH really wants to avoid high French taxes, he could try Moscow. For once, Vladimir Putin would import an oligarch.
Depardieu would find heaven in Putin’s Russia 3 Jan 2013 The French actor, who wants to leave France because of the socialist government’s tax policies, has been made a Russian citizen by his friend Vladimir Putin. The local 13 percent flat tax on income is hard to beat. And Depardieu would live under a regime closer to his liking.
Hollande gets chance to forget 75 pct tax rate 31 Dec 2012 A French court has struck down the controversial 75 pct tax rate on incomes topping 1 million euros a year. The government could redraft the law, but the ruling provides a good opportunity to cease and desist. Sadly, politics could overrule what economics dictates.
Narrowing French-UK yield rings hollow for Hollande 20 Dec 2012 Yields on 10-year debt issued by the UK government may soon rise above those on French state bonds of the same maturity. But François Hollande has nothing to brag about: it is more the sign of a deteriorating UK economy than proof of investors’ confidence in Paris.
Goldman gets reward for taking year-end block risk 13 Dec 2012 Renault’s sale of its 6.5 pct stake in Volvo is a boon for the French carmaker. But it was hazardous for Goldman, which stood to wear as much as 1.5 bln euros in selling the block. Any loss would hurt just as the books are about to close for 2012. The upside? League-table credit.
Qatar gives SocGen an honourable exit from Egypt 13 Dec 2012 Qatar National Bank is buying the French lender’s 77 pct stake in its Egyptian unit, valuing the whole at $2.6 bln. The price of 2 times book value is below pre-revolution multiples, and SocGen faces currency risk. But with few other buyers, it’s better to shrink while it can.
EADS’ governance rejig falls short of true reform 6 Dec 2012 Paris and Berlin will reduce their influence over the aerospace group. Private shareholders Lagardere and Daimler will be free to divest their stakes. But EADS is still a long way from the kind of reform that would prevent unwarranted government meddling in its operations.
Logic won’t topple London from euro perch 3 Dec 2012 The French central bank governor wants euro trading to be done in the euro zone, not in offshore London. The argument is sound. But Christian Noyer should know that finance doesn’t work that way. After all, he is pushing Paris as an offshore currency market - and good luck to him.
Moody’s downgrade is good news for France 20 Nov 2012 The U.S. ratings agency has followed S&P in stripping France of its AAA status. The arguments are well known, and markets yawned. But the move will add to the pressure to plough ahead with reforms. It could even help François Hollande convince the French there’s no time to lose.