Brussels, 28/11/2013 (Agence Europe) - On 27 November, the European Commission approved under EU state aid rules the orderly resolution of French mortgage lender Crédit Immobilier de France (CIF) for reasons of financial stability. France will provide up to €28 billion of state guarantees to fund the orderly resolution. According to the resolution plan CIF will cease any new business and run off its assets over a period of up to 22 years. This will eliminate any distortions of competition caused by the state guarantee.
The Commission recognises that the guarantees are necessary to preserve financial stability and avoid a knock-on effect on the French banking system. In return, the Commission says that CIF will exit the mortgage lending market altogether. In addition, CIF will respect a number of commitments during the 22-year run-off period, notably an acquisition and discretionary coupon ban. Under the plan, the Commission says “CIF will pay adequate remuneration for the guarantees provided by the French state and hence contribute to bearing the resolution costs”. CIF will cease new lending and work out its assets over time. CIF will fund the run-off on the wholesale market with the help of the above-mentioned refinancing guarantees provided by the state, thus alleviating any competition concerns. (FG/transl.fl)