France’s second biggest specialist mortgage lender nationalised
Credit Immobilier de France (CIF), which has around 4% of the French mortgage market, was handed a state guarantee by French finance minister Pierre Moscovici, in part to help it pay a €1.75bn (£1.39bn) covered bond debt, which is due to mature next month.
CITY AM reported yesterday that as part of the bailout, which is subject to European Commission approval, CIF’s chief executive Claude Sadoun has been forced to step down and will be replaced by government appointee Bernard Sevez.
Moscovici said: “To allow the CIF group to respect its overall commitments, the state decided to respond favourably to its request to grant it a guarantee.”
The rescue deal also guarantees the lender’s assets up to a ceiling of more than €20bn and terms agreed prevent the CIF from making new loans.
CIF had originally put itself up for sale in June, but failed to find a buyer, prompting the government to move in. The move is the latest rescue of a financial institution by French authorities, following a bailout of Dexia between 2008 and 2011.
CIF, which provides loans to people with low incomes, is the second biggest specialist mortgage player in France behind Credit Foncier de France and has a large exposure to the French real estate market – which was hit by a 10 per cent contraction in transaction volumes last year.
Its once healthier balance sheet has also been crippled by the evaporation of cheap credit and increasingly onerous banking regulations in the form of Basel III requirements.