France maintains a cautious attitude on credit in the face of high risks

The High Council for Financial Stability, which associates among others the Ministry of the Economy and the Bank of France, judges that "the risks for financial stability remain at a high level, due to the impact of the crisis on the financial statements. financial and non-financial actors, "according to a statement released after a meeting of this body.

More particularly, the High Council notes that the companies "strongly increased their indebtedness in 2020, even if this was accompanied, at the aggregate level, by an almost equivalent increase in their cash flow".

In this context, it was decided to maintain a so-called "major risks" measure consisting in imposing on banks a withholding tax on large indebted companies: the aim is to limit their exposure to these companies to a maximum level of 5% of their eligible own funds.

This measure, in force since July 1, 2018, was renewed for one year in June 2020 and "remains relevant today," said the press release.

It will also continue to exempt banks from having to build up an additional capital cushion, at least until 2022, in order to allow credit institutions to continue to support the economic recovery.

As for the reassuring news, on the other hand, the drift in the conditions for granting real estate loans seems to have stopped.

This question had raised concerns last year, pushing the High Council at a previous meeting to impose restrictions in this area on banking establishments.

However, he relaxed these restrictions at the end of December, while making their monitoring mandatory for banks, noting an improvement on this front.

"The latest data confirm the diagnosis made by the High Council in December: the mortgage market remains dynamic while resting on sounder bases", even if "the volume of loan production is at a historically high level and interest rates close to the lows reached at the end of 2019 ", details the press release.

The High Council specifies that it wants to adopt a measure in the summer to give its latest recommendations a legally binding character.