Caisse des Dépôts et Consignations

views updated

Caisse des Dépôts et Consignations

56 rue de Lille
Paris, F-75356 Cedex 07
France
Telephone: (33 01) 58 50 00 00
Fax: (33 01) 58 50 02 46
Web site: http://www.caissedesdepots.fr

Government-Owned Company
Incorporated: 1816
Employees: 50,000
Sales: EUR 4.47 billion ($5.2 billion) (2006)
NAIC: 522110 Commercial Banking; 522298 All Other Non-Depository Credit Intermediation; 524113 Direct Life Insurance Carriers

Caisse des Dépôts et Consignations (CDC) is a French government-owned banking body that provides a variety of investment banking, infrastructure lending, tax-exempt savings, housing loan and financing, retirement and pension funds, and other services to the French government and French citizens at the local, regional, and national levels. Created in 1816, CDC functions as the central administrator for all French savings deposits and retirement savings funds, as well as under government-backed private funds.

The company has played an important role in financing the construction of low-income housing since the end of World War II, and estimates that one in every six French citizens lives in housing built through CDC funding. A major financial factor behind the development of France's transport infrastructure, including its roadway, rail, and canal systems, CDC continues to provide financial backing to public works and other development projects throughout the country.

CDC also supports the French corporate sector, with investments in more than 250 publicly listed companies, including the position of number one or number two shareholder in 13 of the companies listed on the Paris Bourse's CAC 40 index. Among the companies controlled by CDC are CNP Assurances, the top personal insurance provider in France; property groups Icade (the former SCIC) and Groupe SNI; Transdev, a public transport systems specialist active in France, as well as in the United Kingdom, Spain, Australia, Italy and elsewhere; Compagnie des Alpes, the leading operator of ski resorts in France; and VVF Vacances, providing vacation rental services, resort operations, and the like. CDC holds total assets of more than EUR 200 million, generating a consolidated net income of nearly EUR 4.5 billion ($5.2 billion) in 2006. CDC directly employs 5,000 people, and another 45,000 through its subsidiaries.

BUILDING CONFIDENCE IN 1816

The collapse of the Napoleonic empire and a long series of financial scandals and crises in the early 1800s had sapped the French economy by the time Louis XVIII took the throne. In 1816, the king formed a new French government charged with the task of rebuilding the country's economy, including eliminating its longstanding trade deficit as well as the debt incurred through war. In April of that year, the government created a new body, called Caisse des Dépots et Consignations, with the express mission of serving as a safeguard for public funds, including the pension funds and retirement accounts of the country's civil servants.

By 1822, CDC's mandate had been expanded as it began issuing its first loans in order to fund France's infrastructure development. CDC's first loan, for example, was granted in order to fund the construction and development of a seaport at Dunkirk. From there, CDC quickly expanded to become the major financial partner for many of the development projects carried out by government agencies, as well as local and regional governments. CDC was especially instrumental in the development of France's transport infrastructure. The agency's involvement in this sector started in 1822, when it became the major shareholder in the Compagnie des Quatre Canaux. This investment later led CDC to acquire stakes in nearly all of the country's transport operations, including its railway and shipping services. By 1830, CDC was the largest financial group in France.

Another important extension of CDC's mission came in 1837, when the body became entrusted with the administration of the country's savings deposits. As such, the company became the centralized depositary for French passport savings funds, starting with those held by the Caisse d'Epargne in 1837. Subsequently, all of the tax-exempt savings accounts created in the country, such as La Poste's Livret A, launched in 1881, came under CDC's auspices. With these savings funds, CDC became an important source of long-term lending, providing the backing for public development projects, including housing and transportation infrastructure programs.

CDC expanded its pension fund operations with the launch of the country's first retirement savings fund, the Caisse des Retraites pour la Vieillesse (CRV), in 1850. The CRV represented one of the country's first personal insurance initiatives, helping to establish a personal risk insurance market in France. The creation of the CRV also came as part of the growing transformation of French society. As France joined the Industrial Revolution of the 19th century, its population increasingly shifted from a rural agrarian base to a highly urbanized working-class society. Yet the shift from the countryside to the city also brought an erosion of traditional solidarity systems—in which the close proximity of an extended family permitted care for the elderly, for example. In recognition of this change, the French government and CDC began developing new insurance products to meet the shifting needs of its population. This led to the creation of the Caisse nationale d'assurances en cas de décés, which provided life insurance, and the Caisse nationale d'assurances en cas d'accidents, which supplied accident insurance. In 1959, CDC merged these two bodies together, creating the Caisse Nationale de Prévoyance, which in 1998 became a public company under the name CNP Assurance.

INFRASTRUCTURE SUPPORT INTO THE 20TH CENTURY

The industrialization and modernization of France also led the country to address its infrastructure needs in the second half of the century. In the early 1880s, the French government had passed new legislation, known as the Jules Ferry Laws, which created a free and compulsory public school system in France. CDC was placed in charge of funding this effort, which involved the construction of thousands of schools throughout the country, through a new entity, the Caisse des Écoles. CDC became an important source of funding for the creation of the country's national railroad grid. At the same time, CDC was given a mandate to support the expansion of the country's relatively undeveloped road system, especially in its rural areas. For this, CDC created the Caisse des Chemins Vicinaux in 1868.

COMPANY PERSPECTIVES

Caisse des Dépôts is a French State-owned financial institution with a single vocation: to serve the country. It insures in complete security the management of a large portion of the personal savings of the French public and performs important public-interest missions. It is a key partner of local and regional governments, both directly and through its subsidiaries, and makes long-term investments in French companies—both large and small—and in economic development projects throughout the country. Caisse des Dépôts is evolving and on the move. Its missions are constantly being enhanced and extended. As it becomes more modern, it remains faithful to its core values of trust and reliability.

The rapid rise of France's urban, working-class population had created a enormous housing deficit by the turn of the 20th century. This situation led CDC to take on one of its most important roles, that of providing loans and other funding for the creation of low-income housing. CDC's first housing loans came from its own funds, starting in 1905. In 1908, however, the French government turned over oversight of its own housing loan program to CDC. A significant moment in the country's social housing effort came in 1921, when CDC was granted the right to use its portfolio of savings funds in order to back its low-income housing loans. This allowed CDC to expand its housing loan programs in the years leading up to World War II. CDC also played a role in funding the extension of the national telephone network from the late 1930s.

The war years were a dark period for CDC as the government body became responsible for serving the policies of the occupational and Vichy governments. Among other roles played by CDC was as the depositary for the so-called Aryanization of the French economy, in which much of the French Jewish population were despoiled of their savings, businesses, and possessions. It was not until the late 1990s that CDC, under international pressure, began making reparations for its activities during the war.

FUNDING THE POSTWAR RECONSTRUCTION

Rebuilding from the destruction of World War II, which saw more than 550,000 homes destroyed, became an important focus of CDC's funding efforts in the postwar period. CDC provided the funding for the French government's five-year plan, launched in 1945, while also serving as a central source of lending for the country's local governments as they sought to rebuild their infrastructure and public buildings and structures.

The postwar period also saw an increase in the urbanization of the French population, particularly into the Parisian region, which soon came to account for roughly 25 percent of the total population. Increasingly, France faced a housing shortage, especially a shortage of low-income housing. This situation was further exacerbated by the arrival on the one hand of the wave of French citizens returning to France following the declaration of independence by the North African countries formerly under French colonial control. At the same time, the rapid reconstruction of the country, and the economic boom of the 1950s and 1960s had led to a surge in new immigrants in order to fill the country's low-level positions. In response to the new demands on the housing market, CDC created a dedicated real estate subsidiary, the Société Centrale Immobilière de la Caisse des Dépôts et Consignations (SCIC), created in 1954 specifically to build and administrate low-income housing. Two years later, CDC founded CILoF, the Compagnie Immobilière pour le Logement des Fonctionnaires et Agents de l'Etat, which began building nearly 8,500 residential units destined for the country's civil servants.

The following year, CDC added Société Centrale pour l'Équipement du Territoire (SCET), which was created in order to provide support for the reconstruction and extension of the country's infrastructure on a local and regional level. By the early 1960s, CDC had joined the effort to build France's high-speed Autoroute network, acquiring stakes in a number of the companies charged with building and operating the country's toll road system. In 1963, CDC formed a dedicated division, the Caisse Nationale des Autoroutes, for the funding of highway and roadway construction.

By 1970, the company had also extended Scet, adding a dedicated highway infrastructure subsidiary, Scetautoroute. In the meantime, CDC had also become involved in the development of the French vacation and tourism sector, through the establishment of VVF Vacance in 1958. Another unit, Caisse d'Aide à l'Equipement des Collectivités Locales (CAECL), was formed in 1966 in order to allow the country's regional and municipal governments to turn to private sector funding for their public works projects. Into the 1970s, CDC extended its real estate operations beyond the public sector, launching a new subsidiary, Scic Promotion (later known as Capri).

KEY DATES

1816:: The Caisse des Dépôts et Consignations (CDC) is created as a safeguard for public funds.
1837:: The CDC begins the administration of savings funds.
1868:: Company launches its first insurance funds.
1905:: CDC becomes major source of funding for government's low-income housing objectives.
1954:: Creation of Scic real estate arm (later renamed as Icade).
1983:: C3D is created as a holding company for various public interest-related subsidiaries, including VVF, Egis, Transdev and others.
1998:: The Caisse Nationale de Prévoyance (CNP) Assurance arm goes public.
2004:: Majority stake of Eulia financial services subsidiary is transformed to Caisse d'Epargne.

FRENCH FINANCIAL HUB IN THE NEW CENTURY

CDC began to restructure its various operations and divisions in the early 1980s. As part of this process, the company moved to separate its subsidiary operations from its government funding activities. Toward this end, CDC created a new holding company, C3D, for its subsidiary operations. These included VVF, Scet, Scic, an engineering arm, Egis, as well as the Compagnie des Alpes, formed in 1989 to acquire French ski resorts, and Transdev, a specialist in mass transportation systems created in 1990. Another phase of CDC restructuring process took place in 1986, when CDC spun off CAECL into a new dedicated financial subsidiary, Crédit Local de France.

In the early 1990s, CDC took on a new role as a capital investment provider, launching a small business program to provide private equity funding to the small- and mid-sized enterprise market. While these operations took place primarily through the acquisition of stakes in investment funds, CDC also began a program of direct equity investments starting from 1994. In 1998, CDC's investment operations were transferred to a new subsidiary, CDC Enterprises. By the middle of the next decade, CDC held stakes in more than 250 publicly held companies, and had provided equity financing to more than 2,500 companies across France. Many of these group's investments represented highly strategic, long-term investments. By the middle of the first decade of the 2000s, CDC held major shareholder status, including the top one or two position, in some 13 of the Paris Bourse's CAC 40 index.

In the late 1990s and into the 2000s, CDC increasingly sought to compete within the private sector, while maintaining its role as a primary financial hub for the French government. In 1998, the company listed its CNP Assurance subsidiary on the Paris exchange. The public offering, which established CNP as the leading life insurance provider in France with a market share of 20 percent, enabled the company to bring in strategic partners, including La Poste and Caisse d'Epargne.

Next, CDC merged all of its financial operations into a single unit, called CDC Ixis, which became the focus of its investment banking and assets management operations. The following year, CDC Ixis merged its operations with those of the Regional Savings Bank to form Eulia, held jointly with the Caisse Nationale des Caisse d'Epargne. In 2004, CDC agreed to allow the Caisse d'Epargne to take majority control of Eulia, permitting the creation of a major French banking institution capable of competing on a European scale. Nonetheless, CDC maintained a strategic position in the newly enlarged Caisse d'Epargne, with a 35 percent share.

CDC continued to adapt and expand its functions to reflect the changing political and social situation into the middle of the first decade of the 2000s. In 2005, for example, CDC was given the responsibility for maintaining France's registry of greenhouse gas allowances as part of the country's adherence to the agreements under the Kyoto Protocol. CDC quickly expanded this role, developing its own registry software package called Seringas, which it then marketed to its counterparts in the European Union. By 2007, Seringas had been put into place to oversee the carbon emissions registry of 13 countries. After 190 years, CDC remained an important component in the enactment of the French government's financial and social policies.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

CDC Entreprises; CNP Assurances; Compagnie des Alpes; Egis; Icade; Société Nationale Immobilière (SNI); Transdev; VVF Vacances.

PRINCIPAL COMPETITORS

Natixis S.A.; IXIS Corporate and Investment Bank S.A.; HSBC France S.A.; Credit Foncier de France; Caisse Interfederale de Credit Mutuel; Groupe Credit Mutuel Arkea; Compagnie Financiere du Credit Mutuel S.A.; Credit du Nord S.A.; Dagris S.A.; SOFINCO; CIC Banque CIO-BRO.