TEXT-S&P take ratings actions on French banks

(The following statement was released by the rating agency)

-- The economic risks under which French banks operate have increased in 
our view, leaving them moderately more exposed to the potential of a more 
protracted recession in the eurozone.
     -- We also consider that the economic environment for banking will become 
more demanding as the French housing market is in the process of correcting a 
build-up in housing prices, although we expect the impact on banks and the 
overall economy should be relatively limited.
     -- We think industry risks for France's banking sector could rise in the 
near term as competition in the domestic market could intensify and funding 
conditions could remain volatile.  
     -- We are therefore revising our economic risk score for France to '3' 
from '2'. As we have not changed our assessment of industry risk, which 
remains '2', we are maintaining our Banking Industry Country Risk Assessment 
(BICRA) for France in group 2. 
     -- We are lowering our ratings on BNP Paribas, Cofidis, and
Banque 
Solfea, as we see them as more exposed to this more difficult European 
environment. 
     -- We are affirming our ratings but revising the outlooks to negative on 
Allianz Banque, BPCE, Credit Agricole S.A., Credit Foncier et Communal 
d'Alsace et de Lorraine-Banque, Credit Mutuel, Exane S.A., La Banque Postale, 
RCI Banque, Societe Generale, and Socram Banque.  
     -- We are affirming our ratings and outlooks on Banque Accord, Credit 
Logement, and Credit Foncier de France.

Oct 25 - Standard & Poor's Ratings Services today said it lowered its long- and
short-term counterparty credit ratings on Banque Solfea to 'A-/A-2' from
'A/A-1'. We lowered our long- and short-term counterparty credit ratings on BNP
Paribas to 'A+/A-1' from 'AA-/A-1+'. We lowered our long-term counterparty
credit rating on Cofidis to 'BBB+' from 'A-' and affirmed our 'A-2' short-term
rating. The outlook on the ratings on these banks is negative.

We also revised the outlook to negative from stable on the following banks: 
Allianz Banque, BPCE, Credit Agricole S.A., Credit Foncier et
Communal d'Alsace et de Lorraine-Banque (CFCAL-Banque), Credit Mutuel (rated
entity Caisse Centrale du Credit Mutuel), Exane S.A., La Banque Postale, RCI
Banque, Societe Generale, and Socram Banque. We affirmed the ratings
on these banks. 

We affirmed the ratings on Banque Accord, Credit Foncier de France (CFF), and 
Credit Logement. The outlook remains unchanged at stable for Banque Accord and 
CFF and negative for Credit Logement. 

See below for a comprehensive list of rating actions. 

To reflect its views of a moderate increase in economic risks in France's 
banking industry, Standard & Poor's has changed its economic risk score to '3' 
from '2'. However, the Banking Industry Country Risk Assessment (BICRA) for 
France (AA+/Negative/A-1+) remains in group 2 following this action, as we 
have not changed our industry risk score. 

In our view, the economic risks under which French banks operate are 
increasing, leaving French banks moderately more exposed to the potential of a 
more protracted recession in the eurozone (European Economic and Monetary 
Union). Our view of rising economic risks for France's banking sector also 
reflects the potentially limited, but still noteworthy, impact from an ongoing 
correction in the housing market. 

In particular, we have changed our assessments of the "economic resilience" 
and "economic imbalances" factors of France's BICRA. We now consider France's 
economic resilience to be "low risk," compared with "very low risk" 
previously, and economic imbalances to be "intermediate risk," up from "low 
risk," as our criteria define these terms. We have not changed our assessment 
of "credit risk in the economy," which remains "low," or the three components 
we consider in assessing industry risk, which also remain "low." 

Overall, we continue to view the French economy as relatively stable, but we 
consider that its resilience to adverse external developments has been 
reduced. The constraints of a relatively high public debt burden, reduced 
external competitiveness, and persistent high unemployment are being 
aggravated in our view by the ongoing eurozone crisis, a more protracted 
recession across Europe, and lower domestic growth prospects. We consider that 
this economic environment, including the persistence of low interest rates, 
will put pressure on domestic revenue growth for French banks in 2013-2014. 

We have revised our forecasts for growth in GDP (see "The Eurozone's New 
Recession--Confirmed," published Sept. 25, 2012) and total domestic loan 
growth to close to zero (adjusted for inflation) in 2013-2014, based on our 
view that France is no longer in an expansionary phase. We consider that the 
housing market in particular has entered into a "correction phase" (as defined 
in our criteria), although we expect this correction to be moderate. While we 
anticipate that house prices could fall 10% to 15% over the next two to three 
years, the impact on the banks and the economy should be limited because of 
the banks' underwriting policies, which we consider to be relatively 
conservative. Nevertheless, under our criteria the prospect for such a 
correction has led us to change our assessment of economic imbalances to 
"intermediate risk" from "low risk." 

Despite these rising risks, we think French banks will continue to benefit 
from sound domestic asset quality. In our view, credit risk in the economy is 
still "low," stemming from a combination of protective consumer regulation, 
households' cultural aversion to risk, and the prudent lending and selling 
practices of banks and financial intermediaries. Furthermore, corporate 
creditworthiness remains sound in our view. We expect only a limited increase 
in the domestic cost of risk to 40 basis points (bps) of systemwide domestic 
loans in 2012-2013, from an estimated 30 bps in 2011.  

In our view, France's regulatory standards and supervision are relatively 
strong. In particular, we consider the regulatory framework to be 
comprehensive, based on a broad definition of credit institutions, backed by 
effective and active supervision. We assess France's regulatory track record 
as "intermediate" (between strong and weak). Regulators have contributed to 
preventing any banking failures for more than a decade, and the French banking 
industry withstood the 2008 financial crisis. However, our assessment of 
France's regulatory track record has been negatively affected by the near 
failure of the Dexia group, and of Credit Immobilier de France (not rated), 
one of a few independent midsize players. 

Competitive dynamics in France's banking sector benefit in our view from the 
industry's "restrained" risk appetite, owing particularly to the participation 
of cooperative banks that in general do not seek to maximize return on equity, 
in our opinion. Although the French banking industry is relatively 
concentrated and competition has remained relatively balanced so far, there is 
a risk that competition could heat up as banks refocus their strategies on the 
domestic market. 

In our view, the operational and financial constraints that stem from the 
existence of regulated savings products, in particular "Livret A," are 
moderate and manageable by banks so far. As a tax-free savings scheme Livret A 
is very popular with households, but the features of this savings product are 
quite restrictive for banks in terms of rate setting and how these deposits 
can be used. Furthermore, reforms to the domestic market, in particular around 
a further rise in the Livret A ceiling amount that could make it more 
attractive to households, could jeopardize the capacity of the industry to 
compete for customer deposits at reasonable cost. 

Despite the exceptional volatility in many European markets, we assess 
France's domestic funding risk as "low" because of the system's adequate 
coverage of loans by deposits and moderate net external funding needs. Funding 
is also supported, in our view, by the banks' access to France's deep and 
diversified domestic capital markets, a track record of government-provided 
liquidity support when needed, and access to European Central Bank (ECB) 
funding operations. We expect our ratio for French banks' core deposits to 
loans, as defined in our BICRA criteria, to continue to improve in 2012-2013 
as deposits rise at a faster pace than loans. 

Furthermore, banks are making progress on their strategies to boost capital 
and improve their funding mix, and maintain their large buffers of assets 
eligible for central bank funding. In our opinion, French banks have made 
improvements to their funding structures and regulatory capital ratios in 
recent quarters, which have helped them to maintain adequate access to 
international investors.

However, given the persistence of the recession and doubts of investors about 
the future of the eurozone, we cannot rule out a change to our industry risk 
score if we considered that the current retrenchment of French banks from 
international business to the domestic market could heighten competitive risks 
in the system; or if fragile conditions in wholesale funding markets began to 
deteriorate significantly so as to jeopardize French banks' access to 
international investors.  

The lowering of our ratings on BNP Paribas and most of its "core" and "highly 
strategic" subsidiaries and on Cofidis and Banque Solfea reflects our view 
that these groups are more vulnerable to the impact of rising economic risks 
in the eurozone, particularly in France and countries in southern Europe due 
to their geographic concentrations in these markets. We have therefore lowered 
our stand-alone credit profiles (SACP) on them. The impact of the lowered SACP 
is not, in our view, offset by government support for BNP Paribas, or by 
shareholder support in the case of Cofidis and Banque Solfea. For further 
details on the number of notches of government support we recognize in the 
ratings on systemically important banks in countries like France, and the link 
with the sovereign rating and banks' SACP, see table 22 in "Banks: Rating 
Methodology And Assumptions," published Nov. 9, 2011.

We have also lowered our SACP on RCI Banque and Banque Accord, taking into 
account their sizable international activities in countries that we consider 
to carry more risk than France. However, for RCI Banque and Banque Accord, the 
impact on the ratings is mitigated respectively by government support and 
parent support. 

Our rating affirmations primarily incorporate our opinion that the French 
banking industry continues to bear low risk. We have maintained our baseline 
assessment (the "anchor") on banks operating only in France at 'a-'. However, 
the possibility that industry risks for France's banking sector could 
substantially increase weigh on the anchor.

The outlook revisions to negative on the ratings on Credit Mutuel, and on 
Exane, Socram Banque, Allianz Banque, CFCAL-Banque, and the negative outlook 
maintained on Banque Solfea are based on our view of possibly higher industry 
risks for France's banking sector.

The negative outlooks on BPCE, Credit Agricole, and Societe Generale reflect 
the possibility that we could lower their respective long-term and short-term 
ratings if we consider that both the industry risk for France's banking sector 
has substantially increased and if we were also to lower our long-term 
unsolicited sovereign rating on France to 'AA'. Our negative outlook on La 
Banque Postale's long-term rating reflects the possible lowering of such 
rating if this scenario materializes.

We base the negative outlook on BNP Paribas on the possibility that we could 
lower its long-term rating if we see a material aggravation in the French and 
eurozone economic and operating environments. All other things being equal, a 
negative revision of our industry risk score for France or the lowering of the 
sovereign rating by one notch would have no impact on the ratings on BNP 
Paribas.

Our negative outlook on BPCE, Credit Agricole, Societe Generale, and BNP 
Paribas also factors in the possibility that the risks that we have identified 
for each of these banks could materialize before they have delivered a 
sufficient and sustainable increase in their capital positions to cushion any 
negative impact on their creditworthiness. 

Our negative outlook on RCI Banque and Cofidis reflects the fact that we could 
lower our ratings on the bank if, contrary to our current expectation, the 
banks are not able to respectively achieve a Standard & Poor's risk-adjusted 
capital (RAC) ratio above 10% and above 7% by 2013.

Our revised economic risk scores for France--and other European countries 
earlier this year--have led us to lower our pro forma and projected RAC ratios 
(see "Bank Capital Methodology And Assumptions," published Dec. 6, 2010) for 
some banks.

For Banque Solfea, the impact of higher economic risk in France has, in our 
view, prompted a significant decline in its capital position as measured by 
our RAC ratio, which in turn has led us to lower its SACP. 

For BNP Paribas, BPCE, Credit Agricole, and Societe Generale capital and 
earnings remains a negative rating factor in our view. These banks have made 
strenuous efforts to improve their regulatory capital ratios, which are also 
reflected in our RAC ratios. Measures taken include retaining earnings and 
asset disposals, such as Credit Agricole's recent disposal of its Greek 
subsidiary, Emporiki. However, the rising economic risks offset part of the 
benefit of these improvements in the computation of our proforma and projected 
RAC ratios.

We consider that the pace of capital improvement is not yet fast enough in our 
opinion for BNP Paribas, BPCE, Credit Agricole, and Societe Generale to reach 
a RAC ratio of 7% under our projected horizon. Nevertheless, if the improving 
trend continues, we could revise up our projected RAC ratio for BNP Paribas, 
Societe Generale, and Credit Agricole in the near term. This could contribute 
to an outlook revision to stable on these banks.

We could lower our ratings on Credit Logement if we were to lower our 
long-term rating on France, all other things being equal, based on our 
assessment of government support, which we would drop to zero notches from one 
notch. Our ratings on other nongovernment-related systemically important 
French financial institutions would not be affected by a lowering of France's 
rating by one notch, all other things being equal and in accordance with our 
methodology.

RELATED CRITERIA AND RESEARCH
     -- Group Methodology, April 22, 2009
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
     -- Rating Government-Related Entities: Methodology And Assumptions, Dec. 
9, 2010
     -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
     -- Banking Industry Country Risk Assessment Methodology And Assumptions, 
Nov. 9, 2011
     -- Bank Capital Methodology And Assumptions, Dec. 6, 2010
     -- Group Rating Methodology And Assumptions, Nov. 9, 2011
     -- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
     -- Corporate Criteria--Parent/Subsidiary Links; General Principles; 
Subsidiaries/Joint Ventures/Nonrecourse Projects; Finance Subsidiaries; Rating 
Link To Parent, Oct. 28, 2004 
     -- Regulation Benefits Ratings On European Automakers' Captive Finance, 
May 18, 2006 
     -- General: Captive Finance Operations, April 17, 2007
     -- Banking Industry Country Risk Assessment: France, July 9, 2012
     -- French Banks Can Weather A Falling Housing Market, April 23, 2012
     -- France (Republic of) March 29, 2012 
     -- The Eurozone's New Recession--Confirmed, Sept. 25, 2012
     -- Buffeted By Recession, The Gap Between Western Europe's Core And 
Peripheral Banking Systems Widens, Oct. 4, 2012
     -- Methodology For Mapping Short- And Long-Term Issuer Credit Ratings For 
Banks, May 4, 2010

RATINGS LIST
Downgraded
                                      To                  From
BNP Paribas
Fortis Bank S.A./N.V.
BGL BNP Paribas S.A.
BNP Paribas Personal Finance
BNP Paribas Securities Corp.
BNP Paribas Securities Services
 Counterparty Credit Rating           A+/Negative/A-1    AA-/Negative/A-1+

BNP Paribas Cardif 
 Counterparty Credit Rating           A/Negative/--      A+/Negative/--

Cardif Assurance Vie  
Cardif-Assurances Risques Divers 
 Counterparty Credit Rating           A+/Negative/--     AA-/Negative/--
 Financial Strength Rating            A+/Negative/--     AA-/Negative/--

BNP Paribas (China) Ltd. 
 Counterparty Credit Rating           A/Negative/A-1     A+/Negative/A-1 
 Greater China Regional Scale         cnAA+/--/cnA-1     cnAAA/---/cnA-1+ 

Banque Solfea
 Counterparty Credit Rating           A-/Negative/A-2    A/Negative/A-1

Cofidis S.A.  
 Counterparty Credit Rating           BBB+/Negative/A-2  A-/Stable/A-2 

Ratings Affirmed; Outlook Action

Banque Federative du Credit Mutuel
Credit Industriel et Commercial
Caisse Centrale du Credit Mutuel
Caisse Federale du Credit Mutuel Nord Europe
Credit Mutuel Arkea
Caisse Federale du Credit Mutuel Antilles-Guyane
Caisse Federale du Credit Mutuel de Maine-Anjou Basse Normandie
Caisse Federale du Credit Mutuel Ocean
 Counterparty Credit Rating           A+/Negative/A-1    A+/Stable/A-1

La Banque Postale
 Counterparty Credit Rating           A+/Negative/A-1    A+/Stable/A-1 

Allianz Banque
 Counterparty Credit Rating           A+/Negative/A-1    A+/Stable/A-1 
BPCE   
Natixis S.A.
BRED - Banque Populaire
 Counterparty Credit Rating           A/Negative/A-1     A/Stable/A-1 

Compagnie Europeenne de Garanties et Cautions 
 Counterparty Credit Rating           A/Negative/--      A/Stable/--

Societe Generale 
Credit du Nord S.A.
Franfinance
Komercni Banka A.S.
SG Americas Securities LLC
Societe Generale Bank & Trust
 Counterparty Credit Rating           A/Negative/A-1     A/Stable/A-1

Credit Agricole S.A.
Credit Agricole Corporate and Investment Bank
CA Consumer Finance
Credit Lyonnais
CACEIS
Credit Agricole CIB Australia Ltd.
Caisse Regionale de Credit Agricole Mutuel du Morbihan
Caisse Regionale de Credit Agricole Mutuel du Languedoc
Caisse Regionale de Credit Agricole Mutuel du Finistere
Caisse Regionale de Credit Agricole Mutuel de l'Anjou et du Maine
Caisse Regionale de Credit Agricole Mutuel de Franche-Comte
Caisse Regionale de Credit Agricole Mutuel de Champagne-Bourgogne
Caisse Regionale de Credit Agricole Mutuel de Centre Loire
Caisse Regionale de Credit Agricole Mutuel Sud-Mediterranee
Caisse Regionale de Credit Agricole Mutuel Pyrenees-Gascogne
Caisse Regionale de Credit Agricole Mutuel Paris Ile-de-France
Caisse Regionale de Credit Agricole Mutuel Normandie
Caisse Regionale de Credit Agricole Mutuel Nord de France
Caisse Regionale de Credit Agricole Mutuel Charente Perigord
Caisse Regionale de Credit Agricole Mutuel Brie Picardie
Caisse Regionale de Credit Agricole Mutuel Alsace-Vosges
Caisse Regionale de Credit Agricole Mutuel Alpes Provence
Caisse Regionale de Credit Agricole Mutuel du Nord-Est
Caisse Regionale de Credit Agricole Mutuel du Centre Ouest
Caisse Regionale de Credit Agricole Mutuel des Savoie
Caisse Regionale de Credit Agricole Mutuel des Cotes D'Armor
Caisse Regionale de Credit Agricole Mutuel de la Touraine et du Poitou
Caisse Regionale de Credit Agricole Mutuel de la Reunion
Caisse Regionale de Credit Agricole Mutuel de la Guadeloupe
Caisse Regionale de Credit Agricole Mutuel de Normandie-Seine
Caisse Regionale de Credit Agricole Mutuel de Charente-Maritime Deux Sevres
Caisse Regionale de Credit Agricole Mutuel de Centre-France
Caisse Regionale de Credit Agricole Mutuel d'Ille et Vilaine
Caisse Regionale de Credit Agricole Mutuel d'Aquitaine
Caisse Regionale de Credit Agricole Mutuel Toulouse 31
Caisse Regionale de Credit Agricole Mutuel Sud Rhone-Alpes
Caisse Regionale de Credit Agricole Mutuel Provence Cote d'Azur
Caisse Regionale de Credit Agricole Mutuel Centre-Est
Caisse Regionale de Credit Agricole Mutuel Atlantique Vendee
Caisse Regionale de Credit Agricole Mutuel Nord Midi-Pyrenees
Caisse Regionale de Credit Agricole Mutuel de Loire-Haute Loire
Caisse Regionale de Credit Agricole Mutuel de la Martinique-Guyane
Caisse Regionale de Credit Agricole Mutuel Val de France
Caisse Regionale de Credit Agricole Mutuel de Lorraine
 Counterparty Credit Rating            A/Negative/A-1     A/Stable/A-1

Exane S.A.
Exane Derivatives S.N.C. 
 Counterparty Credit Rating            A-/Negative/A-2    A-/Stable/A-2

RCI Banque
DIAC S.A.
 Counterparty Credit Rating            BBB/Negative/A-2   BBB/Stable/A-2 

Socram Banque
 Counterparty Credit Rating            A-/Negative/A-2    A-/Stable/A-2

Credit Foncier et Communal d'Alsace et de Lorraine-Banque
 Counterparty Credit Rating             A/ Negative/A-1   A/Stable/A-1

Ratings Affirmed

Banque Accord 
 Counterparty Credit Rating             A/Stable/A-1

Credit Foncier de France
Locindus S.A. 
 Counterparty Credit Rating             A-/Stable/A-2

Credit Logement  
 Counterparty Credit Rating             AA-/Negative/--

NB. This list does not include all ratings affected.

 (Caryn Trokie, New York Ratings Unit)