The French finance world is trembling today after news of Credit Immoblier de France’s potential demise.
Days after France’s newly elected President, François Hollande takes on his new role, he is faced with the almighty challenge of a French banking nightmare and the decision whether to nationalize or not one of France’s troubled mortgage lenders.
The central bank of Credit Immobilier de France is a French mortgage lender with national coverage providing over 4% of France’s mortgages and employing over 2 500 people. They are not a traditional bank in that they do not take deposits and act only as a mortgage lender generally specializing in the lower end of the market.
Last Thursday, the credit rating agency Moody’s cut Credit Immobilier de France’s rating to an E on the basis that the company was not financially viable. There are also rumours that CIF’s auditors will not sign off on their 2011 accounts according to the French newspaper Le Figaro.
This has led to speculation that the bank needs to be saved but only the State would be in a position to save CIF it has been stated. If Hollande chooses this route he could be opening the door for other banks to be nationalized and the social and political fall out could be enormous.
The ramifications on the French mortgage market are as yet unknown and will largely depend on whether France decides to bail out CIF or not. A tightening of French lenders eligibility criteria has already been experienced when it comes to non-resident lending and it is expected that banks will become stricter in the coming months.
The market is already in turmoil after two major players (Societe Generale and LCL) left the arena for non-resident mortgages last year and now all eyes will be on CIF’s higher end subsidiary which has an International Department and is a key lender in the market today.
This news has created a shockwave on the non-resident mortgage market and it is now more important than ever that potential borrowers consult with a highly experienced mortgage broker such as French Mortgage Direct when looking for a French mortgage.