The French government has approached the country’s banks and insurers about forming a consortium to buy at least 34 per cent of the Euronext stock exchange, due to be spun off in a public offering, sources close to the matter said on Friday, Reuters reported.
But banks, whose latitude for making such investments have been reduced by looming capital rules, are resisting the government’s entreaties, the sources said.
“On top of these objective considerations, it is also true that no financial institution is eager to please the government after the tax burden they imposed,” a senior financial institutions banker said.
French lenders and the Socialist government of President Francois Hollande have been at odds over several issues, including taxation and regulation, although the banks succeeded in softening a threatened crackdown.
The government is keen on stopping the exchange, now part of NYSE Euronext, from falling into foreign hands, a concern some banks share as it could leave them in a weaker position to win mandates for the listing of major French companies.
Intercontinental Exchange agreed to buy transatlantic market operator NYSE Euronext for $8.2bn in December.
ICE is keen to list as much as 50 per cent of Euronext, an unusually large stake for an initial public offering, as it needs to refinance NYSE’s acquisition, said one of the people involved in the talks, who asked not to be named.
Euronext includes the Paris, Amsterdam, Brussels and Lisbon stock exchanges and the French government is also seeking to bring banks from those countries to the negotiating table.
While the acquisition of a 34 per cent stake looks challenging, there could be a rationale for French and European banks to hold a smaller stake – around 10 to 15 per cent – and have a say in the exchange’s future strategy, a second source close to the deal said.
“If Euronext ends up under non-European command, that would be bad news for European banks,” said a source involved in the talks.
“If all of a sudden, all CAC 40 companies are listed in Singapore or somewhere else outside Europe, French banks won’t be the best placed to conduct IPO and capital raising. That would significantly dent their investment banking business.”
Sources have told Reuters the exchange would also consider selling Euronext as an alternative to a stock offering.