Cyril Roux, the French official who will become the financial regulator on October 1st, worked for insurance giant Axa and for the French treasury before joining the French banking and insurance regulator, the Autorité de Contrôle Prudentiel et de Résolution.
The three years Roux spent at the treasury are particularly important because that is where French banking policy is determined. With regard to the burning issue of outstanding European bank debt, he is likely to adhere to what one source called “the French school”, which opposes German reluctance to Europeanise debt resolution, and make it retroactive.
Roux’s presence in Dublin should strengthen the Franco-Irish alliance on the issue.
The ACPR is under the authority of the Banque de France. The main changes resulting from the 2008 crisis have been structural.
In 2010, the Commission Bancaire and the insurance regulator ACAM were merged into one entity – the ACPR. The R – for "resolution" – was added by the law on separation and regulation of banking activities, adopted by the French parliament on July 18th.
Weak with the strong
Critics of the system say French regulators are strong with the weak and weak with the strong. Put differently, the laws controlling French banks are weak because the banks are strong and have fought tooth and nail to stave off attempts to regulate them.
French bank executives had been alarmed by François Hollande's speech at Le Bourget in January 2012, when he famously said that his "real adversary" was not Nicolas Sarkozy but "faceless finance".
In the same speech, Hollande promised: “I will separate the activities of banks that are useful for investment and employment from their speculative operations.”
To the dismay of the French left, and some critics on the right, the new law, drawn up by finance minister Pierre Moscovici, defines "speculation" so narrowly that few if any of France's big banks will be forced to establish subsidiaries for the purpose of investing the banks' own capital.
In Paris, the law is jokingly called “Volvic” – a hybrid of the Volcker law in the US, which will in theory forbid banks from engaging in speculation, and the British Vickers report, which would establish “Chinese walls” between retail banking and speculation.
“Volvic”, the French say, is as pure as the mineral water of the same name – because there is nothing in it.
In February, a group of high-ranking civil servants, economists and businessmen called Les Arvernes published a critique of the new law in the economic newspaper La Tribune. They accused Hollande of "giving in to the pressure of the French banking lobby without a fight".
Former civil servants
In France, many of the country's leading bankers – for example François Villeroy de Galhau at BNP Paribas, Xavier Musca at the Crédit Agricole and Gilles Briatta at the Société Générale – are former high- ranking civil servants.
French regulators may be poorly equipped to detect violations of banking rules. Scandals have invariably been broken by the media, never the regulators. “The fines commission takes very few decisions, for small amounts, and they only catch the small banks,”an industry source noted.
In 2012, the fines commission heard a dozen cases and imposed some €1.5 million in fines. “If a bank is earning billions because it’s not controlling traders, a €100,000 fine won’t stop them,” the same banking source said.
