France’s third-biggest co-operative bank, Credit Mutuel, is to examine the consequences of a possible split from a group of its regional banks, whose shareholders have voted for financial independence.
Credit Mutuel Arkea and online bank Fortuneo want autonomy from their parent group, which has a French retail market share of more than 15%. The group operates a central body responsible for the solvency and liquidity of all regional entities, including that of Arkea.
The outcome of the dispute could put the credit rating of Arkea at stake, as the split could lose it the backing of the group’s mutual financial support mechanism.
“The vote of our local banks … confirms unequivocally the position that we have been defending for months, namely a legal recognition of a central body for Credit Mutuel Arkea,” said Arkea’s head, Jean-Pierre Denis.
Credit Mutuel has undertaken a reform, opposed by Arkea, to be compliant with regulatory rules and make the governance and strategy-setting more centralised.
Arkea argues there is a conflict of interest as its regional banks compete on the same ground with other networks of the group, and calls for a separate central body – which would require a special bill – while staying in the group and keeping the brand unchanged.
Confederation nationale du Credit Mutuel, an association which represents the group’s interests and includes the central body, rejected the separation bid in the hope of preserving the unity of the group.
“In any case, two companies that proclaim to be competitors would not be able to operate under the same brand,” it said.
Arkea had €110bn (£98bn) in assets as of end-2015, representing around 15% of the group’s total balance sheet.