FRENCH BANKING! IS IT SAFE?

[Philouis]

With the failure of banking institutions in the USA and UK, is there any similar danger of a bank failure in France?

For instance, if a bank fails in the UK,  in which you have savings of £100K, I understand that you are only guaranteed a £35K pay back! Would this be the case in France?  If this is a possibility, would it not be more sensible to spread any large sums (eg. money from the sale of your house) into more than one bank?

If anyone has this knowledge, it would be very interesting to hear it. I am sure that Clair will come up with an answer!

[Clair]

Best to ask Sunday Driver! [:D]

http://www.completefrance.com/cs/forums/1400554/ShowPost.aspx

[Philouis]

Thank you Clair, as always you are a mine of information.

It would appear that one must not put all their Euros in one basket! To be safe therefore it is wise to have more than one banking account.

I do feel that there is a reluctance in France to issue mortgages unless one is on a sound financial footing, so what is happening elsewhere, hopefully is less likely to happen here!

[Logan]

Mortgages are difficult to obtain in France at the moment. Banks operate in global markets. Credit Agricole has lost close to 7 billion euros to sub-prime and seen profits plunge by 95%. Also French banks are no different to any other in that they obtain a large percentage of their lending funds from other banks. Those banks have shut the doors. Credit globally is closed for business. In my view it's likely to be like that for some time.

http://www.ft.com/cms/s/0/2e9f61b4-74d2-11dd-ab30-0000779fd18c.html?nclick_check=1

[ams]

The Irish Government have recently increased the deposit guarantee to €100,000. per person per bank. So a married couple could have a €1,000,000 guaranteed with a spread over just 5 banks. In addition many of them are also offering 6% interest rate guaranteed for 1 year, some with access to capital.

 

hope the above helps.

 

 

ams

[Martin963]

Didn't le President say last night that the French state was going to guarantee ALL deposits of any sum?    Maybe I misunderstood......

[suein56]

Did anyone catch the radio programme this morning when a government spokesperson - who seriously upset my French neighbour who was listening - said that, in the event of a potential crisis in the French Banking system, it might be behoven on the French government to refuse to let investors have access to their money for, say, a period of 3 months until the crisis had been resolved?

Sue

[woody234]

good idea for french goverment to freeze banks for 3 months if there is a crisis, because the french goverment know the short sellers can bring down any bank on the planet within 4 hours if the short sellers need to make some money for a new ferrari or a new house in chelsea

[allanb]

[quote user="woody234"]the short sellers can bring down any bank on the planet within 4 hours if the short sellers need to make some money for a new ferrari or a new house in chelsea[/quote]Sorry, but this is a misconception.  A short sale is just a slightly complicated kind of bet, and it can't bring down a bank, any more than betting on a horse can affect the result of the race.  

However, it's very convenient for politicians and regulators to have somebody to blame.

[dragonrouge]

Lets look at the implications of the three month rule.

At the moment we have funds with CA and which are covered under the present rules.  We have banked with CA since 2000.

The funds are spread between current and deposit.

Ok if there is a freeze then we can draw on our UK sources to pay our day to day expenses.

However within next week I have to pay let us say 15000 in euros to artisans and will transfer funds from deposit to current to pay the bills.  What happens if CA freeze funds.  I have the funds but cannot get access.  How are all the artisans in France going to react to us saying sorry cannot pay for Paris has frozen all of our accounts?  There would be a revolution.  Then artisans could not get fresh supplies for the suppliers are owed money then producers will not produce for what is the point in producing in one is not going to get paid for three months.

Surely the three month rule could not become fact?

[dragonrouge]

another thought on the three month concept.  Shortly the impots will want those of us who are taxed  here to pay their way!

Sorry its frozen in the bank so sorry................

[minnie]

I can't help feeling that someone has the wrong end of the stick.

Anyone with money in a bank is an investor.  If the banks were to freeze all funds then the whole economy would grind to a halt.  Nobody could pay anyone else, buy food, pay for petrol or anything else.

What happens if someone is in the middle of buying a house and needing to pay for it?

I just cannot see that happening.....

 

 

[Clair]

[quote user="Philouis"]

With the failure of banking institutions in the USA and UK, is there any similar danger of a bank failure in France?

For instance, if a bank fails in the UK,  in which you have savings of £100K, I understand that you are only guaranteed a £35K pay back! Would this be the case in France?  If this is a possibility, would it not be more sensible to spread any large sums (eg. money from the sale of your house) into more than one bank?

If anyone has this knowledge, it would be very interesting to hear it. I am sure that Clair will come up with an answer!

[/quote]

I have just found this Q&A in a French paper about how best to protect your savings:

Epargnants: comment bien réagir à la crise

(in google-English here)

[Patmobile]

[quote user="allanb"][quote user="woody234"]the short sellers can bring down any bank on the planet within 4 hours if the short sellers need to make some money for a new ferrari or a new house in chelsea[/quote]Sorry, but this is a misconception.  A short sale is just a slightly complicated kind of bet, and it can't bring down a bank, any more than betting on a horse can affect the result of the race.  

However, it's very convenient for politicians and regulators to have somebody to blame.
[/quote]

You may be right - in theory - but a horse doesn't rely on public confidence to keep it in the running, and banks do.  If by short selling, market operators can succeed in driving down the share price, however unjustly or temporarily, then in practice, and especially in the current climate, public confidence in the bank could be fatally undermined.  

Even without a crisis of public confidence, a bank whose share price has been driven down by sellers may find it hard to borrow the funds it needs to operate, and then may have to ask for shareholders to put up more money, or look to be rescued by a takeover by another bank or even the government.  When people find out about that it's curtains.

Patrick     

[Cat]

Clair, there was a report on TV last night on the safeguards in place to protect savers with money in French banks.  They spoke, as usual, about the 70,000 limit per bank per person, but then mentioned that the fund for reimbursing savers stood at either 1.3 million or 1.3 milliard (billion) euros. 

I can't remember which it was, and have tried googling without success, can you do any better?

[Clair]

There's this interview in Capital (2nd question): capital.fr

Do you know which program this was on?

[Cat]

It was mentioned yesterday munchtime, perhaps the TF1 news, and then again on France 5, C dans l'air

http://www.france5.fr/c-dans-l-air/index-fr.php?page=resume&id_rubrique=984

[Clair]

[quote user="Cat"]It was mentioned yesterday munchtime, perhaps the TF1 news, and then again on France 5, C dans l'air http://www.france5.fr/c-dans-l-air/index-fr.php?page=resume&id_rubrique=984[/quote]

1 milliard 800 millions d'euros  (1 800 000 000 € = 1.8 billion €) quoted in this TF1 item from the evening "munchtime" news: http://tf1.lci.fr/infos/jt/0,,4107743,00-crise-financiere-que-risquent-les-francais-.html

For reference: milliard

EDIT: I hope I've got the number right... [8-)]

[Cat]

Aha, so 1 800 000 000 € makes 1.8 milliard?  So if I divide that by 70 000 I get 25 714, or the number of people that could be reimbursed by the fund.

Not many, is it [:-))]

EDIT: almost forgot to say thank you Clair!

[Clair]

That's a bit worrying, innit? [:'(]

[Cat]

It seems ludicrously inadequate.  I'm hoping that someone can point out a glaring mistake in my logic or my maths.

[Jonzjob]

Looks correct on those numbers Cat, but you missed off the 0.28571428etc.etc off the end. The 1/4ish could be important?

Stupid isn't it?

[splishsplash]

President Sarkozy did say in his speech this week, that no person in France would lose even 1 euro of their savings.

How much we can rely on that promise i'm not sure!

Does the Post Office savings account have the same 70,000 euro guarantee & how much can one put in there please?

[Clair]

The Banque postale is a French bank and is covered by the same scheme as other French banks.

Which specific post office saving account?

[andyh4]

[quote user="Cat"]

Aha, so 1 800 000 000 € makes 1.8 milliard?  So if I divide that by 70 000 I get 25 714, or the number of people that could be reimbursed by the fund.

Not many, is it [:-))]

EDIT: almost forgot to say thank you Clair!

[/quote]

 

If you are looking at global catastrophy the I agree it does not look like a lot, but if it is just (say) Credit Aglicol - Carcassonne (and remember that a number of French baanks are local and not national) that goes belly up then do they have 25000 savings depositors and do each of them have the 70 000€ in their accounts?  Probably plenty in the coffers to cover a couple of collapses and all that is needed at the moment is a good dose of confidence.