Open

Coming up

Don't miss

Replay


LATEST SHOWS

IN THE PAPERS

A bellwether for what not to do

Read more

DEBATE

Pakistan's Political Turmoil: Can Imran Khan's PTI Party Depose the Government? (part 2)

Read more

DEBATE

Pakistan's Political Turmoil: Can Imran Khan's PTI Party Depose the Government?

Read more

IN THE PAPERS

'The world’s dictators love the unrest in Ferguson'

Read more

ENCORE!

Montreal Stories

Read more

BUSINESS DAILY

More than half of French households will pay no income tax this year

Read more

MEDIAWATCH

#IceBucketChallenge and hashtag activism

Read more

WEB NEWS

Web users taking on the "Ice Bucket Challenge" to fight ALS

Read more

FOCUS

Israel's minorities and military service

Read more

  • Ex-PM Juppé announces bid for 2017 French presidential race

    Read more

  • Dozens killed as landslides strike Japan’s Hiroshima

    Read more

  • IS militants ‘behead’ missing US journalist in gruesome video

    Read more

  • Deadly airstrikes hit Gaza as ceasefire with Israel collapses

    Read more

  • Tentative peace in Ferguson despite second fatal shooting

    Read more

  • Suspected Ebola cases in Austria, new drug raises hopes

    Read more

  • WWII anniversary highlights best - and worst - of Paris police

    Read more

  • Headscarf at the beach sparks French MEP’s fury

    Read more

  • Iraqi army clashes with militants in Tikrit after retaking key dam

    Read more

  • Video: Life in under-siege Donetsk

    Read more

  • Racism, riots and police violence: USA under scrutiny

    Read more

  • ‘Let it be’: Londoners sick of Abbey Road tourists

    Read more

  • Australia to free children from immigration detention centres

    Read more

France

French banks hit by downgrade as consumer confidence stalls

Text by FRANCE 24

Latest update : 2012-10-26

Standard and Poor’s ratings agency downgraded three French banks on Friday -- including global banking giant BNP Paribas – which was compounded by new data showing that French consumer confidence had again fallen to record lows.


Standard and Poor’s (S&P) ratings agency downgraded three French banks on Friday, including global giant BNP Paribas, as new data showed French consumer confidence had once again hit record lows.

S&P lowered its long-term outlook for BNP Paribas to A+ from AA- and placed another 10 French banks on negative outlook, including Société Générale, Crédit Agricole, Allianz Bank and Crédit Mutuel.

BNP, France's No. 1 listed bank, fell 3.1 percent to 38.39 euros in early Friday trade, behind Société Générale and Crédit Agricole, respectively down 3.7 and 3.4 percent, on the news. They were among the biggest decliners in the STOXX Europe 600 bank index .SX7P, down 1.5 percent.

"The economic risks under which French banks operate have increased in our view, leaving them moderately more exposed to the potential of a more protracted recession in the eurozone," the ratings agency said in a statement.

The agency also cited an array of economic risks including an overheated property market in France and government savings reforms.

While French banks have been cutting costs and slashing their exposure to peripheral, crisis-stricken eurozone economies like Greece - helping their shares gain between 30 and 45 percent year-to-date - they have among the biggest cross-border exposures to Italy, which is in recession.

They are also exposed to regulatory uncertainty as France's Socialist government hammers out the terms of a campaign promise to curb banks' risky trading activities.

Consumer confidence tumbles

S&P’s move was compounded on Friday by the release of government data showing that French consumer confidence had fallen to the record lows seen last year.

The consumer confidence index fell one point over the month of October to 84 points, the INSEE national statistics agency said. The long-range average of the index is set at 100 points.

The consumer outlook about future livings standards in France dropped another 3 points in October, for a cumulative drop of 28 points since June to equal the record low of minus 59 points seen last November.

The index has fallen by seven points since May as pessimism grows among French consumers, whose assessment of their future financial situation fell by 4 points to minus 25 points.

The French have rarely been as pessimistic about their future, raising concerns that spending may soon see a decline. Private consumption is currently the only sector still seeing growth in France.

The growing pessimism is prompting more French consumers to save rather than spend. "There are more households which feel it is better to save," said INSEE, noting a 10-point rise in that sub-index since July.

"The increase in savings is a rather bad sign, in the sense that households are confronted with increases in unemployment and taxes, which is leading them to save as a precaution," BNP Paribas economist Helene Baudchon told AFP.

"This will likely end up weighing on household consumption," she added.

The French economy has remained stalled at zero growth for the past three quarters, but the government is counting on 0.8 percent growth next year to meet its EU commitments of bringing down the public deficit to 3.0 percent of gross domestic product – a target that some economists have already warned may be overly optimistic.

(FRANCE 24 with wires)
 

Date created : 2012-10-26

  • FRANCE

    Thousands march in Paris against 'austerity'

    Read more

  • FRANCE

    French government unveils tax-and-slash 2013 budget

    Read more

  • FRANCE

    Unemployment in France surpasses three million

    Read more

COMMENT(S)