Deposits strengthen French banks – Fitch

Continued deleveraging coupled with €60bn in increased deposits through 2012 have helped the bigger French banks improve their financial position over the past year, says Fitch Ratings.

The banks have also reduced their reliance on short-term and volatile funding sources, Fitch said.

“We expect these trends to continue as the banks strengthen their funding to maintain investor confidence and in response to regulation.”

“Higher customer deposits, combined with deleveraging plans to reduce overall funding needs, enabled the loans/customer deposits ratio of the large French banks to fall to below 130% at end-2012 from around 145% in 2008. French banks have paid particular attention to decreasing their reliance on US dollar funding, so deleveraging has focused on such activities as corporate and investment banking, and specialised finance businesses. The banks have also lengthened the duration of their wholesale funding as their market access improved during 2012.”

There is a risk that the stability of more recent deposits are not as stable, but Fitch added that most demand deposits are still “unremunerated”, meaning they continue to provide a cheap and stable funding base.

For more information on the funding and liquidity profiles for the sector, see the report “French Banks’ Funding is Resilient”, published today on

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