According to statistics, the four largest French commercial banks have suffered losses exceeding €25 billion due to the subprime mortgage crisis!
These four banks are BNP Paribas, Societe Generale, Crédit Agricole, and Natixis.
BNP Paribas suffered the least losses. As early as June of this year, BNP Paribas' public data showed losses of just €2.3 billion. However, with the subsequent outbreak of the subprime mortgage crisis, their losses have exceeded €5 billion, which is why they needed a €5.1 billion government bailout.
However, the other three banks have also expressed dissatisfaction. After all, BNP Paribas suffered the least losses, yet it received government assistance, while they will need to find their own ways to survive.
For example, Societe Generale lost €4.9 billion in the Societe Generale fraud case discovered in January of this year alone. Combined with other losses, Societe Generale conservatively estimates that it has lost at least €6 billion!
To meet capital adequacy requirements, Societe Generale raised approximately €5.5 billion through a capital increase and share expansion, finally breathing a sigh of relief.
Besides Industrial Generale, Crédit Agricole and Natixis also suffered heavy losses and were each seeking capital injections.
"We participated in the share financing rounds of Industrial Generale and Crédit Agricole. I heard that Natixis, in order to secure funding, issued a large number of shares to William Weber Capital..."
"William Weber Capital?"
Baron asked deliberately after hearing Arnault's words.
"Yes, it's an investment firm with ties to the Weber family. I heard they made a fortune from short selling. A company like this is a complete threat to society. I don't think Natixis should accept investment from them."
Baron didn't say much after hearing Arnault's direct criticism. But if he knew he was the owner of William Weber Capital, how would he feel? ...
"
We've reached an agreement with Natixis to inject €4.5 billion into them, acquiring a 30% stake and becoming the bank's second-largest shareholder..."
Baron then met with Ashley Weber, CEO of William Weber Capital.
As Arnaud Lagardère previously mentioned, Natixis, France's fourth-largest commercial bank, suffered heavy losses during the crisis and urgently needed a capital injection. Therefore, William Weber Capital took advantage of this opportunity to participate in their financing.
Natixis is one of France's largest commercial banking groups, formed in 2006 through the merger of subsidiaries of the Caisse des dépôts and the Banque Populaire group. Investment banking has always been Natixis's primary source of revenue, accounting for nearly half of its net profit.
However, due to the impact of the subprime mortgage crisis, according to public data released by Natixis, its losses increased by nearly €1.5 billion in the second quarter of this year alone.
This single statistic clearly illustrates the impact of the subprime mortgage crisis on the French banking industry. Compared to the same period last year, BNP Paribas' market capitalization has shrunk by over 40%, Societe Generale's by over 55%, and Crédit Agricole's by nearly 60%. Natixis's market capitalization has plummeted by a whopping 65%!
Crucially, due to losses incurred during the subprime mortgage crisis, these banks' capital adequacy ratios are already insufficient. According to the Basel Accord, the fundamental international banking regulatory framework, the target capital adequacy ratio for commercial banks is 8%.
To meet this target, these banks, starting with Industrial Bank in March of this year, have been implementing financing plans.
BNP Paribas received a government injection of funds, while Industrial Bank and Credit Agricole both raised capital through share issuances. As for Natixis, due to its drastic decline in market capitalization, and following the precedents of Industrial Bank and Credit Agricole, its internal financing plan was ultimately rejected, forcing it to seek external financing.
Why is this so?
Take Industrial Bank, for example: how did they carry out their capital increase and share expansion? Vacation With My Stepmom According to its capital increase and share expansion plan, shareholders of Societe Generale were entitled to subscribe for one new share for every four shares they held. Ultimately, 116 million new shares were issued, raising over €5.5 billion.
Crucially, the issue price was €47.50, while Societe Generale's share price was €77.72 at the time. This meant the new shares were issued at a discount of nearly 40%.
Of course, since the new share issuance was primarily targeted at existing shareholders, it didn't cause much dissatisfaction. Instead, shareholders actively subscribed, demonstrating their investors' continued confidence in the company.
Rural Credit Bank's capital increase and share expansion plan was somewhat similar to Societe Generale's, though the new shares weren't issued at such a high discount, but still around 20%.
By the time William Weber Capital entered into negotiations with Natixis, their market capitalization had fallen to less than €11.5 billion. A year earlier, Natixis's market capitalization had reached €32.5 billion.
Urgently in need of funds, Natixis made some concessions to William Weber Capital, ultimately agreeing to William Weber Capital's offer to purchase 30% of its newly issued shares for €4.5 billion.
This made William Weber Capital the second-largest shareholder of Natixis, France's fourth-largest commercial bank, behind Banque Publicis Group, which holds approximately 35%.
"While our capital injection temporarily alleviates Natixis's cash shortage, they will also need to improve mortgage lending terms for individuals and implement some layoffs to stabilize their operations,"
Ashley Weber said, sounding quite elated. This is understandable, as becoming Natixis' second-largest shareholder, with a stake only 5% behind the controlling shareholder, signifies that William Weber Capital holds significant influence within the bank.
The reason why William Weber Capital was able to acquire shares in Natixis Bank was mainly because it had previously made a profit of 2.5 billion euros from a bet against NM Rothschild Bank, and then subsequently made huge profits by shorting the French stock market, especially bank stocks.
In addition to investing in Natixis Bank, William Weber Capital still has a considerable surplus in its account...
"Don't worry about the future. I think the impact of the crisis will continue, so we just need to increase our holdings in Natixis Bank when the time is right. Also, are there any developments on the Rothschild side?"
Ashley shook her head upon hearing Barron's question and said,
"They were secretly investigating me at the beginning, but I didn't give them the chance. But now, I'm afraid they don't have so much time to keep an eye on me. The LCF Rothschild Group is already struggling, and their investment losses are not small."
"We still need to be more cautious, Ashley. Although the Rothschild family is not as good as it used to be, they are not that simple to have been able to pass on to the present day."
Ashley Weber shrugged,
"I will pay attention, Your Highness."