The calm before the storm

French banking, particularly retail business but also investment banking, has for decades been shaped by government action. There is a division between privately-owned banks such as Société Générale and Paribas, and state-owned and mutual banks such as Crédit Agricole and Crédit Mutuel. Some regulations favour the mutual sector, such as the monopoly of distribution of the popular Livret A tax-free savings accounts held by Crédit Mutuel and the Caisses d'Epargne.

Rival bankers complain about the unfair competition and many recommend demutualization. "Some parts of the sector, like Crédit Agricole, are moving towards being more like commercial banks," says Société Générale's deputy chairman, Patrick Duverger. "But there is much room for improvement." Reform of the mutual sector will take place eventually, but whether through government initiative or by decree...

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