Baudouin Prot defends the "stress tests" European - July 26, 2010
LE FIGARO. – How do you exercise stress test which is to engage Europe?
Baudouin PROT. – The resistance tests show that European banks are sound and well capitalized. They were conducted using a common methodology and from economic scenarios comparable, if not more stringent than the scenarios used in a similar exercise conducted in spring 2009 by the Americans. These results should put an end to a period of unfounded concern about the health of the European banking system. However, it is essential to economic life that banks trust.
What do you think the score of French banks?
They have passed the test with flying colors.Three reasons: they entered the crisis well capitalized, they have weathered the crisis better than others and have significantly increased their capital by allocating a significant portion of their results for two years. In the end, and in the worst case scenario, the excess equity that French banks compared to the waterline defined by European regulators reached 70 billion euros. This is all the more remarkable that almost all French banks have repaid the government aid, while still 180 billion euros in state support in the European banking system.This is good news for France: our banks are more than ever to finance projects of their clients.
What lessons learned, while the Basel Committee on Banking seems to require more capital?
The French banks have for long argued that, compared to the level reached today, a massive build new capital would be unnecessary and inappropriate. The results of stress tests clearly support this point. Europe needs just as much vigor and rigor, when the economy picks up in many parts of the world. It should not be an excessive overinvestment reduces the ability of all its banks to finance the economy and thus stimulate growth. The decisions to be taken in Basel, the Financial Stability Forum and ultimately to the G20 in November in Seoul, are, for me, a historical significance.Europe must become fully aware of its core strategic interests and defend them.
You leave the presidency of the French Banking Federation at the end of a busy year. What are your reasons for satisfaction?
Both at the heart of the crisis in 2009 that since the beginning of 2010, French banks have never stopped doing their job, providing their customers with the relationship and funding the economy. If the overall image of the banks has suffered, the satisfaction rate of customers vis-à-vis their own bank remained above 80%. This shows the quality of the device relational French banks, through a dense network of trained counselors. Now they have stopped investing in this device even though it is already higher than other European countries cash advance loan.The pace of 30,000 hires per year in IFA has been maintained in 2009 despite the crisis, and will be again in 2010.
A tough job, with advisers attacked by customers …
These difficulties were at their peak a year ago. Since the relational climate has thankfully subsided in the agencies. And with the executive committee of the FBF, we conducted many meetings with regional business leaders in recent weeks: I also note a positive trend in relations. All this is explained by the fact that growth in France in outstanding bank credit to individuals and SMEs is the best in Europe. In late May, outstanding housing loans grew by 5.1%, those SMEs 3.8%, a record in recent times.The latest survey also shows that Oseo the cost of credit, which was an obstacle to investment for 48% of SMEs in November 2008, the remaining 23% only. French SMEs also benefit from a lower cost of credit watch on the European average.
Financial reforms, on both sides of the Atlantic, you feel they fit well?
French banks are convinced that regulatory changes are needed to draw lessons from the financial crisis. That being said, we must make the right decisions. The Anglo-Saxons tend to give undue weight to the ratios, when the quality of supervision is essential. In France, a single supervisor effective – which is still being enhanced – and bank officials have avoided the bad loans that have cost so dear to the American community.The situation is very different.
The paradox is that U.S. banks, causing excesses, emerge from the crisis stronger …
I note that U.S. banks are the only ones to have massively increased their size in their market after the crisis, with the help of taxpayer elsewhere. The crisis resulted in a wave of bank mergers that made JPMorgan, Wells Fargo or Bank of America mastodons much more impressive than before. At the same time, few European banks have grown. Moreover, while all the 13,000 European banks are subject to Basel II since 2008, U.S. banks do not always apply.It is difficult to accept that capital requirements are influenced by demands of countries we are not sure they apply the rules in the same way that European banks.
Added to the tax systems …
The fact that France, the United Kingdom and Germany are the only ones in the world to impose such a tax on banks that can not be cons-productive to the competitiveness of these countries. French banks, in any case, can not afford both to finance the economy, maintain a buffer of high security into equity while financing the budget deficit.