Sunday, September 16, 2012

The French Public Investment Bank – A guide on how to write and say (almost) nothing

On July 31, 2012, the French Ministry of Economics and Finance has published a report on the government’s project to set up a public investment bank. This report is meant to be a synthesis of the government’s preliminary work on the project.

While reading the report, I realized that French is a wonderful language for writing without communicating much content. If you read French, please find the 8 page report here:


Please don't get me wrong here, this is not a value judgment on the public investment bank itself. I was just a bit disappointed when reading the French report.

Current situation – Everything ok?

In the report, the members of the French Ministry of Economics and Finance start off analyzing the current situation:

  • First, the current overall situation in the bank credit market for corporates seems relatively satisfactory but heterogeneous.”
  • Second, the equity investment market seems to stabilize after the turbulences linked to the crisis.”
  • Third, this situation might deteriorate in the medium term because of upcoming reforms of the banking and insurance industry.”

Purpose – Financial services for any needs of companies?

The bank should offer “a panoply of services for any needs of companies, especially fast growing small and middle sized companies and of actors in the social and solidary sector”. Its goal is to ensure the access to financing, especially for exporting and innovative firms.

Strategic choices – Horizontal and vertical? National and regional?

The report offers 4 strategic choices for the public investment bank:

  • It shall offer “general financing for companies (horizontal logic)” as well as “specific financing (vertical logic of industrial politics)”. In terms of size, “it shall serve small and middle sized companies and big companies only exceptionally”. One could also say that it shall offer almost everything to almost everybody.
  • Depending on the situation, the bank should co-finance together with the private sector or finance alone.
  • As regards its regional organization, the bank shall be “a national bank, active in the [French] regions through regional departments”.
  • The bank’s funding needs to be defined. In the report, we can read about almost 20 BEUR equity capital provided by the existing public financing structures. The government “might allocate additional funds”.

Financial Instruments

To fulfill the above purpose, the bank can

  • (co)finance,
  • make minority equity investments, and
  • use additional instruments such as guarantees.

What else?

We can find many key words in the report:

  • Prudential regulation
  • One stop shop taking into account specific needs
  • Increased simplification and efficiency
  • Result driven rather than structure oriented approach
  • Capacity to evolve
  • Increased service quality

The public investment bank should be operational early 2013.

What needs to be done in the short run?

Let me finish this article by quoting the 2 main elements that, in the ministry's view, should be carried out in the short run:

  • To put the public investment bank rapidly in place, the preliminary works should be carried out well.”
  • Certain methodical aspects should be emphasized to ensure that a quick operational start of the public investment bank will be carried out under satisfactory conditions.”

Let's wait and see...


  • Synthèse du rapport de la mission de préfiguration de la banque publique d’investissement (BPI) – July 2012