French banks swim against a retreating European tide

French banks, unlike their European rivals, are vowing to hang on to a broad array of businesses and even grow market share, a strategy backed by long-term investors but penalised by the market.

For while most European banks are battling sluggish economic growth and super low interest rates by cutting costs and retreating to their “core”, French lenders have decided the time is right to push the frontiers.

However, their pursuit of a so-called universal banking model has so far not won stock market approval, with shares in France’s three biggest banks, BNP Paribas, Société Générale and Crédit Agricole all trading at a discount to European peers.

Where they do have strong support is from the political establishment who believe France needs to punch above its weight in global financial services to support French companies’ overseas business in Francophone countries and beyond.

French Economy Minister Emmanuel  Macron said in December “we have strong banks, based on a universal model, which is envied by many...and they [banks] were less affected by the crisis than others because they are more solid”.

This ability to pursue a variety of activities and geographies relies on a...