Reform of Tender Offers Procedure
Basic Banking Services
New Monetary and Financial Code
The French government codified the statutes and regulations that deal with banking and financial activities by way of an ordinance dated December 14 2000.
The new Monetary and Financial Code has seven chapters, which relate to:
- money;
- financial instruments and products;
- financial services;
- financial markets;
- credit institutions and investment firms;
- banking and financial authorities; and
- French overseas territories.
This codification does not reform the financial and banking laws. The government has merely compiled the statutes and regulations that relate to financial and banking activities within a single code. Certain modifications to the original text have been made, but they are formal and do not affect the content.
Reform of Tender Offers Procedure
Law 2001/420 of May 15 2001 on New Economic Regulations increases the level of supervision by French authorities over tender offers when they concern French credit institutions.
Pursuant to Article 511(10) of the Monetary and Financial Code, as amended by the new law, any person intending to submit a project tender offer to the Conseil des Marchés Financiers (the stock exchange authority, which regulates tender offers) in order to acquire securities in a credit institution licensed in France, must now inform the governor of the Bank of France eight business days before filing the tender offer.
This prior notice obligation also exists in Italy and the United Kingdom. The requirement will enhance the Bank of France's control over acquisitions of stakes or control in French credit institutions.
Law 98-657 of July 29 1998 introduced the notion of 'basic banking services' to the Banking Act 1984 (now codified in the Monetary and Financial Code). However, its content has just been defined by Decree 2001/45 of January 17 2001.
Under French law, any individual or legal person domiciled in France is entitled to have a deposit account opened in a credit institution, the postal agency or treasury financial services.
However, the financial institution concerned may elect to limit the services provided to the holder of such a deposit account to basic banking services. Pursuant to Article 1 of the decree, basic banking services include:
- the opening, custody and closing of an account;
- one change of address per year;
- upon request, a copy of the account particulars;
- delivery of a monthly account statement;
- cash transactions;
- cashing of cheques and transfers;
- cash deposits and withdrawals at the counter;
- payments by means of standing orders, transfers or inter-banking notes;
- remote access to the account's position;
- a cash card; and
- two chequebooks per month or equivalent means of payment.
In the event that a financial institution refuses to open such an account, the Bank of France may compel another institution to do so. In such a situation, the chosen institution must provide the basic banking services to the holder free of charge. It is not clear whether this provision allows the credit institution to be reimbursed by the client for expenses incurred in the course of carrying out any of the above transactions on the client's behalf (eg, fees paid to a foreign credit institution in the case of an international credit transfer).
The obligation for credit institutions to provide basic banking services has been introduced to mitigate their monopoly over banking activities, and because of the modern-day requirement that everyone have a bank account. For example, it will soon be compulsory in France for any person intending to open a telephone account with France Telecom to have a bank account.
For further information on this topic please contact Philippe Portier or Raphaële Navelet at Jeantet & Associés by telephone (+33 1 45 05 81 96) or by fax (+33 1 47 04 87 98) or by e-mail ([email protected] or [email protected]).
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