Economy and Banking Sector of France

France, a founding member of the European Union located in Western Europe, is one of the modern economies in the world and the second largest economy in Europe.

Economy of France is diversified across many sectors: nuclear power, metallurgy, electronics, telecommunications, machinery, chemicals, aircraft, automobiles; textiles, food processing; and tourism.

Financial services and banking are important part of the economy. The major French banks: BNP Paribas, Credit Agricole and Societe Generale are among the largest banks in the world.

Location Western Europe
Population (2016)66 661 621 ↑ (0.00%)
EU Status member since 1952
Economy
National Currency EUR (Euro) since 1 January 1999
GDP 
    Nominal GDP (2015)2 183.6 bln EUR ↑ (+0.02%)
    Nominal GDP per Capita (2015)32 800 EUR ↑ (+0.02%)
    Real GDP Growth (2015)1.2 % ↑ (2014: 0.4 %)
Inflation Rate 
    CPI, MoM (Sep 2016)-0.2 % ↓ (Aug 2016: 0.3 %)
    CPI, YoY (Sep 2016)0.5 % ↑ (Aug 2016: 0.4 %)
    CPI, Year Average (2015)0.1 % ↓ (2014: 0.6 %)
Unemployment Rate (2015)10.4 % ↑ (2014: 10.2 %)
Government Bond Yield (Sep 2016)0.18 % ↑ (Aug 2016: 0.15 %)
Credit Ratings (as of Sep 2016)
    FitchAA very high credit quality, outlook stable
    Moody'sAa2 high grade, outlook stable
    S&PAA high grade
Taxation
Withholding Tax 0.0 - 30.0%
Double Taxation Agreements 113 signed agreements
Information Exchange 
    Exchange on Request 29 signed agreements
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 14 November 2013, Model 1
Banking Sector
Financial Market Development 4.6 (max 7.0) rank: 31st out of 138 countries
    Banks' Soundness 5.7 (max 7.0) rank: 32nd out of 138 countries
Banking Industry Country Risk 2(1 - lowest risk, 10 - highest risk)
    Economy Risk 2
    Industry Risk 2
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Aaa prime
    Foreign CurrencyAaa prime
Deposit Rates (Aug 2016, EUR)0.82 % ↓ (Jul 2016: 1.31 %)
Banking Sector Structure 
    Number of Banks569
    Recent Changes (2015) new banks: 6, closed banks: 22
    Consolidated Assets (2015) 6 940.13 bln EUR ↓ (-3.44%)
Major Banks
 BNP Paribas  Societe Generale
 Credit Agricole  HSBC France
 BPCE
 List of Banks in France

French Economy

National Currency

France joined the Euro Area on 1 January 1999.

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GDP

According to Eurostat, nominal GDP of France in 2015 was 2 183.6 bln EUR.

France underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.3% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 1.2% which was below the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in France.
Chart 1. Real GDP Growth in France. Source: Eurostat, International Monetary Fund.

In 2015, nominal GDP per capita in France was 32 800 EUR.

France has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 6.2% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  France; European Union = 100.
Chart 2. GDP Per Capita at Purchasing Power Parity in France; European Union = 100.
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Inflation Rate

According to Eurostat, inflation rate in France in 2015 expressed as annual percentages of average consumer prices was 0.1% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in France.
Chart 3. Inflation Rate in France. Source: Eurostat, International Monetary Fund.
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Taxation in France

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding tax rates applied on payments of interest and dividends in France are shown in Table 1.

Dividends Interest
Natural person, resident 21.024.0
Natural person, non-resident 30.00.0
Table 1. Withholding tax rates in France.
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Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

France signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Argentina
 Armenia
 Australia
 Austria
 Azerbaijan
 Bahrain
 Bangladesh
 Belgium
 Benin
 Bolivia
 Bosnia and Herzegovina
 Botswana
 Brazil
 Bulgaria
 Burkina Faso
 Cameroon
 Canada
 Central African Republic
 Chile
 China
 Congo, The Democratic Republic of the
 Cote D'Ivoire
 Croatia
 Cyprus
 Czech Republic
 Ecuador
 Egypt
 Estonia
 Ethiopia
 Finland
 Gabon
 Georgia
 Germany
 Ghana
 Greece
 Guinea
 Hong Kong
 Hungary
 Iceland
 India
 Indonesia
 Iran, Islamic Republic of
 Ireland
 Israel
 Italy
 Jamaica
 Japan
 Jordan
 Kazakhstan
 Korea, Republic of
 Kuwait
 Latvia
 Lebanon
 Libya
 Lithuania
 Luxembourg
 Macedonia
 Madagascar
 Malawi
 Malaysia
 Mali
 Malta
 Mauritania
 Mauritius
 Mexico
 Monaco
 Mongolia
 Montenegro
 Morocco
 Namibia
 Netherlands
 New Zealand
 Niger
 Nigeria
 Norway
 Oman
 Pakistan
 Panama
 Philippines
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation
 Saudi Arabia
 Senegal
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Sweden
 Switzerland
 Syrian Arab Republic
 Thailand
 Togo
 Trinidad and Tobago
 Tunisia
 Turkey
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uzbekistan
 Venezuela
 Vietnam
 Zambia
 Zimbabwe

There are also several agreements between France and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Kenya
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Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

France signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Andorra
 Anguilla
 Antigua and Barbuda
 Aruba (Apr 2013)
 Bahamas
 Belize
 Bermuda
 British Virgin Islands
 Cayman Islands
 Cook Islands
 Costa Rica
 Curacao
 Dominica
 Gibraltar
 Grenada
 Guernsey
 Isle of Man
 Jersey
 Liberia
 Liechtenstein
 Saint Kitts and Nevis
 Saint Lucia
 Saint Vincent and The Grenadines
 San Marino
 Sint Maarten (Dutch part)
 Turks and Caicos Islands
 Uruguay
 Vanuatu

There are also several agreements between France and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Brunei Darussalam

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

France signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information

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FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

France has FATCA agreement with the U.S. in effect since 14 November 2013 (Intergovernmental Agreement Model 1). Financial institutions operating in France are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: French financial accounts hold in U.S. financial institutions will be reported to French authorities.

Further Information:
FATCA and European countries

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French Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in France is scored 4.6 out of maximum 7.0 and ranked 31st out of 138 analysed economies. Soundness of banks is scored 5.7 bringing France into the 32nd place, trustworthiness and confidence of financial market is scored 4.7 (40th place).

Financial Market Development in France.
Chart 4. Financial Market Development in France. Source: WEF.
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Banking Industry Country Risk

Banking Industry Country Risk Assessment (BICRA) is a methodology designed by Standard&Poor's "to evaluate and compare global banking systems". A BICRA is scored on a scale from 1 to 10, ranging from the lowest-risk banking systems (group 1) to the highest-risk (group 10). The BICRA methodology has two main analytical components: "economic risk" and "industry risk". Each of the components is then further divided into 3 "factors" that result in an economic and industry risk score for each country.

France is included into group '2' with economic risk scored '2' and industry risk scored '2'.

BICRA Group 2
Economic risk 2
    Economic resilience very low
     Economic imbalances low
    Credit risk in economy low
Industry risk 2
    Institutional framework low
    Competitive dynamics low
    Systemwide funding low
Government support assessment supportive

Table 2. BICRA for France. Source: S&P's.

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Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in France are summarised in Table 3.

Scheme Participantsall credit institutions operating in France, branches of non-EEA banks, branches of French banks abroad
Scheme Exemptionsbranches of EEA-banks (covered by their home countries)
Eligible Depositorsnatural persons, legal entities
Covered Accountsall deposit accounts (current accounts, demand accounts, passbook accounts, term accounts, home savings accounts, home savings schemes, etc.)
Covered Currenciesall currencies
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 3. Deposit guarantee scheme in France.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

Further Information:
Deposit Guarantee Schemes in Europe

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Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Euro) deposit ceiling for France is set to Aaa (prime), foreign currency deposit ceiling is Aaa (prime).

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Deposit Rates

In Aug 2016, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.82% which was above the Euro Area average (0.53%).

Deposit Rates in France.
Chart 5. Deposit Rates in France. Source: ECB.

Further Information:
Compare Bank Deposits in France

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Banking Sector Structure

Currently there are 569 credit institutions operating in France.

Recent structural changes (2013 - 2015) of the banking sector of France are summarised in Table 4.

201320142015
Number of Opened Banks886
Number of Closed Banks112122

Table 4. Recent structural changes in the banking sector of France.

All the credit institutions operating in France can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Banks480
Branches of foreign banks88
Central banks1

Table 5. Number of banks by category in France.

The list of the most recently opened banks in France is provided in Table 6.

NameStart Date
 Crédit Immobilier de France Développement (new)August 2015
 CHINA CONSTRUCTION BANK (EUROPE) S.A (new)July 2015
 Australia and New Zealand banking group limited (new)April 2015
 Lombard Odier (Europe) S.A. (new)March 2015
 AGENCE FRANCE LOCALE (new)January 2015
 Mirabaud et Cie (Europe) SA (new)January 2015
 GE Capital bank limited (new)November 2014
 The Export-Import Bank of China (new)November 2014
 Toyota material handling Europe rental AB (new)November 2014
 ORWELL UNION PARTNERS LLP (new)October 2014

Table 6. The most recently opened banks in France.

There are 88 branches of foreign banks from 23 different countries in France. Table 7 shows 10 countries having the biggest number of branches in France.

Country of OriginNumber of Branches
 United Kingdom19
 Germany16
 Luxembourg8
 Italy6
 Netherlands4
 Spain4
 Iran, Islamic Republic of4
 Belgium3
 Japan2
 Ireland2

Table 7. Number of branches of foreign banks in France grouped by country of origin.

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