Rampant bank and capital markets borrowing in France is alerting financial policymakers to the danger of French corporations taking on ever more debt to make acquisitions.
French M&A volumes reached their highest level since the 2008 financial crisis in 2017, with outbound volumes accounting for around two thirds of deals, according to Dealogic.
Out of about 20 key global markets, France was second only to Hong Kong in terms of the increase in private non-financial debt over the last two years, according to a January report from the Institute of International Finance.
France’s financial stability board, the HCSF, acknowledged this could be a problem in December when it proposed to cap systemic French banks’ exposures to the most indebted big resident firms, initially at 5% of their capital base.
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