Prepared for James | Delivered November 1, 2019
French Banking Industry
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To determine the major regulatory constraints or factors affecting the French banking system and any significant changes in the last two-five years, in order to evaluate the working of a small business bank in France.
Through our preliminary research, we have determined an overview on the major constraints faced by the french banking system and also regarding the current changes in the industry.
Constraints On French Banking Sector
Low growth rate,
low interest rate environment
and regulatory constraints are putting pressure on the french banking sector's margins, estimated at
France is one of the
most challenging countries
for processing payroll taxes due to rigid regulations. Employment in the banking sector is directly
affected by the payroll taxes
which are extremely heavy in case of France.
International Monetary Fund has warned about the
rising debt levels
due to low interest rates, creating financial vulnerabilities that can upset the stability in the french banking system.
Relaxation Of French Banking Monopoly
In October 2017, a new ordinance was passed to modernize the regime of
assets management and financing debt
. The banking monopoly in France prohibited non-bank entities from carrying out any banking activity and this ordinance changes that system to include
alternative forms of financing
French Insurance Code
was amended to permit insurance companies to provide loans to SMEs.
Tough Bank Capital Requirements
French banking regulators are applying capital buffer which will oblige french banks as well as foreign banks operating in France to hold capital amounting to
0.25% of risk-weighted
creates additional capital
while economy is going strong and was implemented as a resistance for any international financial crisis.