November 2016


While funding the economy is a priority, changing the regulations currently weighing on banks could jeopardise this universally shared objective.

VSE/SME lending momentum is going strong! Outstanding loans are up 3.2% year-on-year, financing over a million VSEs/SMEs in France. And, contrary to popular belief, access to credit is plentiful in France: 9 out of 10 investment loan applications are approved. Furthermore, SMEs in France enjoy the most attractive interest rates in the euro zone at 1.86% for new loans(1) versus 2.35% elsewhere.

In addition to lending, banks help SMEs expand their business through regular and transparent dialogue, while providing them with the information they need. This effort is encouraged by the 105 FBF committees and the establishment of partnerships with organisations such as WikiPME recently, the leading digital community for entrepreneurs. Sharing content and networking increase access to information for entrepreneurs on how to work intelligently and efficiently with banking partners.

And the banking/SME partnership is doing well, which is a prerequisite for stimulating growth. So don't fix what's not broken by piling on more constraints!

The problem is, regulations are not headed in the right direction. Banks are being burdened with increasingly cumbersome constraints. Let's take a concrete example: in the current work being done by the Basel Committee, financing costs for building infrastructures such as motorways could end up increasing nearly fourfold, and the cost of financing an aircraft by nearly sevenfold!

On top of that, you have the prudential regulation of new accounting standards, aka IFRS 9, which calls for loss allowances to be immediately recognised for credit risk according to statistical losses on loans rather than actual loss experience.

All things considered, this could cause pressure on the reduction of banks' balance sheets that carry these loans, the cost of lending could go up, but also the banking industry is facing a real risk of becoming "standardised"...as what makes us unique is the closeness we have offer our customers.

It would be a real shame to lose that! When regulation is well-calibrated, it can be a good thing. Take for example the implementation of the SME supporting factor in the EU, an initiative supported by the FBF, which establishes an appropriate prudential treatment of SME financing. In practical terms, for every loan granted to an SME, the bank is required to mobilise less capital than for a loan to a large corporation. There's no denying that this is a key supporting factor for SMEs.

Yes, the financial industry needs to be regulated, but we need to agree on the objectives!

(1) Interest rate of new loans < 1 million euros whose duration is less than one year - ECB, end of 2016.

Marie-Anne Barbat-Layani
Chief Executive Officer of the French Banking Federation

Tweeter : @FBFFranceTweeter : Linkedin

Our Positions

Transmission is a form of entrepreneurship
The FBF has decided to support the communication campaign on business transmission launched by the Secretary of State for Trade, the Craft Industry, Consumption, and the Social and Solidarity-Based Economy. This initiative complements our entrepreneur information and awareness-raising programme (www.fbf.fr and www.aveclespme.fr). The purpose of this campaign is to inform business owners and project sponsors of the opportunities generated by buying and selling companies, which can be a real source of momentum for regional employment and entrepreneurship. Through their local networks (37,567 branches around the country) and the development of expertise in favour of VSEs/SMEs, banks are natural contributors to the campaign, capable of assisting business owners with their plans to sell or acquire companies. Some 60,000 companies are sold each year, and 90% of companies for sale have fewer than 50 employees.

French banks and SMEs: partners in growth
For the second year in a row, the FBF took part in "Planète PME", the annual SME trade fair organised by the CGPME (French SME employers' association). This year's theme, "We are growth", was one the banking industry could really get behind. Funding the economy, and especially SMEs, is the No. 1 strategic priority of French banks. Lending stimulates projects and growth for French companies. The SME trade fair also provides an opportunity to get feedback from SMEs and improve the SME/banking partnership.

Solid risk management
According to a study recently published by KPMG, banks based in Europe hold approximately €1,200 billion in non-performing loans (a loan is considered non-performing when payments are late by 90 days or more). Situations vary, however. In France, the ratio of NPL volumes to total outstandings was 4% at end-2015, vs. 5.70% in the euro zone and 18% in Italy (source: IMF, Global Financial Stability Report). French banks not only have fewer impaired outstandings, but also better provisions, as shown by ACPR data. In other words, France boasts one of the strongest banking systems in Europe, and that's an advantage for our country.

In their own words

Remarks by Vice-President Dombrovskis at the ECOFIN press conference, Luxembourg
[About the ongoing discussions in the Basel Committee on banking reforms]. « We need to find solutions that both ensure financial stability and do not weigh unduly on the financing of the broader economy in Europe. It is equally important to retain sufficient risk sensitivity in the regulatory framework. We want to avoid changes which would lead to a significant increase in the overall capital requirements. We received strong backing from all EU Member States on this in July. And this is in line with the Basel Committee's own commitments. In today's discussions Ministers reiterated this position – that we need to stick with the approach taken in July. »

The FBF int the media

La Tribune - “Digital media are one of the biggest challenges facing banks today along with interest rates and Basel IV”


In an interview with La Tribune, FBF Director Marie-Anne Barbat-Layani reviewed the major challenges banks are currently facing. The most obvious is the digital challenge, with digital media changing the way people do their day-to-day banking. Of course, advisers and branches still have a major role to play. The business model French customers are looking for is an accredited CRM, backed by good digital service. Digital relations have brought customers even closer to their bank. So digital media should be seen as an opportunity to improve customer relations and innovation. Most importantly, competition with new non-banking institutions or even fintechs has raised a number of security issues: “We are highly vigilant when it comes to overall system security and ensuring a level playing field in terms of competition.”

Le Monde - “French banks are strengthening their commitment to youth integration programmes”


Le Monde recently published a 2-page article on the partnership between the AFB (French bankers’ association) and APELS (French Agency for Education through Sports), whose “Déclics sportifs” programme has enjoyed phenomenal success and paints a different picture of youth in underprivileged neighbourhoods. The goal of the partnership is to provide opportunities to talented young people from athletic clubs, who tend to be marginalised in seeking employment, to find long-term work in the banking industry by encouraging their determination and enthusiasm and building their skills. “We hired over 36,000 people last year. It's not a question of philanthropy. Banks need talented people. 80% of the youth involved in the Déclics sportifs programme end up with permanent contracts. These associations are a veritable wellspring of talent.” Drawing on this experience, the AFB encourages all its members to join the new programme.

Le Monde - “The top French banks plan to hire 8,100 to 12,000 people on permanent contracts in 2017”


French banks have continued their massive hiring initiatives in 2016, and will follow suit in 2017. French banks can attribute their solidity to their balanced business model, which consolidates their key role in employment, particularly through the recruitment of people with qualified backgrounds. Furthermore, the age pyramid promotes a healthy number of retirements. As explained by the FBF: “French banks take their role in employment very seriously and have implemented a cautious personnel management approach. Net employment may be down, but the overall hiring volume is substantial. " In all networks combined, France recorded over 36,800 recruitments in 2015, over 2/3 of which on permanent contracts.


7 / 22

Cop 22 – COP 22 in Marrakech


2016 AMF interviews - Impact of Brexit on European financial services


EIFR: Annual conference in Paris Reconciling the Banking union and the CMU for a competitive Europe: why and how?


Publication of the White paper on Innovation cluster « Banks & Fintechs : innovation objectives in retail banking”


Bruegel conference: “Competition policy and regulation in the banking sector”, Brussels

28 / 29

Basel Committee meeting, Santiago


Regional meetings: Marie-Anne Barbat-Layani in Lille


G20 2016: German presidency

Tweet of the month

Figure of the month

M-A Barbat-Layani: We are delighted to assist @WikiPME, an innovative project for the digital business community

€20.5 billion new business loans granted by French banks