On the night of Wednesday to Thursday, November 14 the deputies voted the guarantee that the public authorities grant to the CIF.
What Article 66 of the 2013 Finance Act provides
Even if the guarantee corresponding to the liquidity needs of the establishment is granted in a scenario of extinction, it does not mean today that the Crédit Immobilier de France is doomed to disappear. Indeed, the State guarantee, amounting to 28 billion euros (reduced to 24 billion in 2016) relates to two distinct elements:
- The receivables of ” CIF Euromortgage “, which is responsible for refinancing the group’s mortgages, CIF Assests , a securitization mutual fund and interest rate hedging contracts up to 12 billion. This measure should facilitate the circulation of the group’s cash between the various structures.
- New issues, capped at 16 billion. It is this component of the text that could allow the establishment to continue its activity .
In return, the group is placed under the control of the public authorities and a commissioner appointed by the State assists from now on the boards of directors. On the other hand, it is expected that the guarantees will be subject to remuneration.
Despite the vote of the National Assembly, the game is far from won. Article 66 of the Finance Act will have to obtain the approval of the European Commission , which constitutes a major obstacle. The requirements of the institution could indeed force the state to dismantle the activities of the group, as was the case for Dexia, even to demand its extinction.
The reasons for an economic shipwreck
The serious difficulties faced by Crédit Immobilier de France stem from an obsolete economic model that has deteriorated since the beginning of the financial crisis. While banks use their deposits in part to lend to their customers, the CIF is forced to refinance itself entirely on the market.
The liquidity problems became insurmountable from this summer, when the rating agency Moody’s decided to degrade the establishment by three notches.
After working to allow the CIF to rely on a banking group, Bercy’s first intentions were to put it to extinction. It therefore seems certain that State intervention is no longer only intended to save the bankruptcy group by allowing it to meet its obligations, but also to give it the possibility of continuing in a new form. , on the condition of finding a viable business model and simplifying the structure of its organization chart, which was considered too complex.
A major player in social accession
Recognized by all for his expertise in home loans and the institution’s role in social housing with low-income households, his new manager, Michel Bouvard may win his bet and succeed in saving what could eventually become the social bank of the poor , a term already advanced by different personalities.
A role that could have been held by La Banque Postale, which has just launched the marketing of a loan for low-income households just after announcing that it was ready in its external recruitments to give priority to employees of the Crédit Immobilier de France.
In any case, if the CIF disappears, the Bank Postale would be the only one capable of fulfilling this role because it is difficult to see the traditional network banks interested in a market as unprofitable as that of the social accession.
2012: the dark year of real estate
CIF’s troubles come at a time when the real estate market is at its worst. Despite historically low rates and a slight increase in September, the production of housing loans continues to decline.
But current average interest rates of 3.50% are also due in part to the fact that banks are now implementing a risk-reduction policy and are not offering loans for long periods. Thus, in more than 80% of the cases the loans do not exceed 25 years.
It must be said that the abolition of many social benefits and in particular the end of the PTZ system in the old one in January 2012, which constitutes 60% of the housing loan market, has largely penalized young workers without sufficient income and the most modest households.
Thus, even if the stone remains a safe haven, 2012 should be one of the darkest years in the real estate market and only a price reversal could avoid the recession in 2013.