State to bail out CIF bank

THE state has agreed to bail out struggling French bank Crédit Immobilier de France (CIF), to save it from bankruptcy.

Following a lowering of its rating by Moody’s, the bank group is in crisis and in need of urgent help, unable to face up to a drop in borrowing and an expected flood people seeking to pay off their debts early.

The bank had already faced difficulties since Moody’s gave a warning in February and had been looking for a buyer but failed, leaving an appeal to the state the only chance.

After an emergency board meeting on Friday night the state agreed immediately to step in.

In the first instance the state is expected to offer a guarantee of €4.3 billion, according to Le Figaro, which added that the final figure could be much higher than that.

However approval from the European Commission and Parliament will have to be sought for the state help.

The CIF has 300 branches and has put out €30 billion in loans. It owns 56 local “Sacicaps”, bodies that help low earners get on to the property ladder in partnership with local authorities and is also involved with HLMs (social housing).

The government imposed conditions including insisting that the CEO, Claude Sadoun, step down – without compensation. He is being replaced by another board member, Bernard Sevez.

CIF has denied a report in La Tribune that he received a pay-off of €1.5 million.

The CIF will be placed under state supervision and unable to take any major decisions alone. It will not for the present be making any new loans.

This is the first time the state has had to intervene to help a French bank in crisis since Dexia.

The CIF’s situation has been compared to that of the Crédit Foncier de France, which was nationalised in the 1990s, but the state has said nationalisation is not an option this time.

Because the CIF has solid assets it is claimed the state’s help will not end up being a cost to the taxpayer.