This is an unequivocal observation. “The major French banks appear clearly as European players“, Concludes the Banque de France in a bulletin on the international activity of the major French banking groups. BNP Paribas, BPCE, Crédit Agricole, Crédit Mutuel, Société Générale and HSBC Continental Europe are also considered, representing 86% of the entire French banking sector with total consolidated assets of € 8,073 billion at the end of 2021 “major banksplaced under the direct supervision of the European Central Bank (ECB) since 2014. And for good reason: the euro area accounts for 39% of their international commitments at the end of 2021, ahead of other countries in the Organization for Cooperation and Development economic (OECD) outside the European Union (EU) (about 34%). The Union outside the euro area (about 11%) completes the podium.
of the European banking sector
This weight of the euro area is not the result of chance. “The latter were able to support the process of European integration that began a little over twenty years ago with the creation of the single currency. Thus, while the euro area (excluding France) accounted for only 27% of its international commitments in 2005, a level higher than the region’s weight in world gross domestic product (17%), it concentrates almost 40% of its commitments at the end of 2020. despite a lower weight in world GDP (12%)»Explain Isabelle Bottineau, Jérôme Coffinet and Chloé Le Meur of the Banque de France. For economists, the continued momentum during the health crisis attests to this “The implementation of the European Banking Union allows for the resilience of loans within the euro area, even in the event of a deterioration in the economic situation“.
The period also corresponds to the trend of the single banking market with the implementation of the “single booklet” in 2014 and of institutions such as the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM). By linking legal development and funding resilience, economists are finally giving themselves arguments to defend the Banking Union. “To complete the integration of the banking union, it appears necessary to facilitate the centralized management of capital and liquidity of groups within the area, and to remove cross-border obstacles to the consolidation of the European banking sector.“, They conclude.
Higher credit risk
The major French groups are generally distinguished by a high degree of internationalization. The international exposures of French banks account for 11% of all international commitments worldwide, while the total commitments of the French banking system amount to 9% of all global banking commitments. Only Japan (15.4%), the United States (13.5%) and the United Kingdom (12.7%) are above. This international presence is particularly facilitated by the 1,100 branches of the six groups, of which over 750 are financial companies excluding credit institutions.
What increases the risk of large French banks? Not really, answer the economists of the institution. It is true that credit risk is higher for foreign exposures (non-performing loan rate of 2.7%) than for domestic exposures (1.6%). But it dropped sharply from 4.1% at the beginning of 2018 to 2.7% at the end of 2021, ”he added.which reflects a consolidation of the portfolios of the major French banking groups“. Especially since international commitments are mainly denominated in euros, 43% at the end of December 2021, which also limits exchange rate risks. Ultimately,”This geographical diversification also improves the general risk profile of banking groups, making them less dependent on the economic situation of a particular country or geographical area.“, The economists judge.