Good practices in banking mergers

1
Good practices in banking mergers

• The French case

Naples, March 23 and 24th, 2009 Ute
Meyenberg CFDT-Banques
2

Agenda

• 1000 Introduction  Véronique Descacq
  (Secrétaire Générale CFDT Banques)
• 10 15 Présentation du projet PARTNER de fusions
  bancaires par Andrea Pastacaldi (Chef de
  Projet Partner)
• 1045 Discussion
• 1100 Présentation de scenarios européens de
  marches financiers (A. Pastacaldi)
• 1130 Présentation du scenario français de
  restructuration du marché bancaire Le
  secteur bancaire en France  un secteur en
  mutation. (Ute Meyenberg CFDT-Banques)
• 1145 Discussion

3
Agenda

• 1345 Pratiques en France Présentation du
  Guide des fusions  (Véronique Descacq)
• 1415 Exemples de bonnes pratiques (salariés et
  management) en cas de fusions et
  restructurations
• a) Aspects juridiques (JP Raillard - Syndex)
• b) Aspects sociaux (Didier Mas - Calyon) La
  prise en compte des aspects sociaux
• c) Communication (Jean Pierre Jaraudy /Caisse
  dEpargne)
• d) Impact sur la santé au travail (Ute
  Meyenberg)
• e) Les bonnes pratiques internationales 
  (Bernard Drevon- BNPP) Fusions
  transfrontalières - Limplication du CEE

4
Participants

• Andrea Pastacaldi APQ FIBA
• Marilena Furio - FIBA
• Veronique Descacq Secretary general
  CFDT-Banques
• J Paul Raillard - Syndex
• Luc Mathieu (Banques Populaires - Fédération
  Banques)
• Didier Mas (Calyon - CASA)
• Jean Pierre Janaudy (Caisse dEpargne IdF)
• Bernard Drevon (BNPP)
• Anne Pechtner (Fédération Banques Société
  Générale)
• Ute Meyenberg (Fédération Banques- Calyon)
• Joël Gerin (Crédit Agricole SA)
• Damien Lagaude (Fédération Services Assurances)
• Jean-Paul Bouchet (CFDT-Cadres)
• François David (CFDT-Cadres)

5
The French banking system

• A sector under permanent restructuring

6
The French Financial Sector

• A major weight in the French economy
• Banks represent 2,6 of GNP (2007)
• Capitalisation by end of 2007 11
• By assets, the 6 biggest banking groups are part
  of the first 50 banks worldwide.
• A very concentrated system
• The first 7 institutions collect 90 of deposits
  and hand out 80 of loans
• In a French department, one or two banks often
  own up to 25 of total market share
• By international comparison, France presents a
  concentrated system
• Employment 468 086 (BCE)

7
The French Financial Sector

• 747 credit institutions (by end of 2007)
• Out of which 239 foreign institutions
• Out of which 321 finance institutions
• Out of which 347 , i.e. 48, owned by 6 big
  banking groups
• 6 public institutions (OSEO, La Banque Postale,
  18 caisses de crédit municipal, Le Crédit
  municipal de Paris, CMP Banque (filiale du crédit
  municipal) et Banque Solfea (ex-Petrofigaz de GdF
  et Cofinoga)
• 27 695 cash points without La Banque Postale,
• 39 560 with BP (increase since 2000) this
  increase is part of a technology change

8
The French Financial Sector
Number of foreign banks in Europe in 2006
Most foreign banks in France are member of the
CEE (159 out of a total of 237 in 2007)
Source BCE
9

• Restructuring

10
Overview 1984-2006
Evolution of the number of cooperative banks
since 1984
The cooperative sector is the major actor of
restructuring in the late 80ies and early 90ies
11
Regroupings after 1996

• After 1996, the reorganisation of the sector is
  shown by
• Mergers and acquisitions of national banking
  groups
• Reduction of the number of banks in France
• The internationalisation of the 3 major banking
  groups (the idea behind was an export of know-how
  in retail banking)
• Acquisition of French banks by foreign
  competitors (CCF by HSBC in 2000)
• Establishment of production platforms (Caceis,
  2005)

12
Regroupings after 1996
Evolution of the Number of credit institutions in
France

• Since 10 years, all categories of credit
  institutions have experienced a decrease.
• - 25 for commercial banks
• - 32 in the cooperative sector
• - 58 for specialised institutions

13
Merger activity
Number of Mergers and Acquisitions in France over
the last 10 years
The French financial sector has experienced the
most MA in Europe (together with Italy, Great
Britain and Germany)
14
Foreign acqusitions

• French institutions have made significant
  acqusitions abroad
• BNP Paribas buys the 6th biggest Italian banks,
  Banca Nazionale del Lavoro in 2006
• BNP Paribas is present via the US by Bank of the
  West, a private banking group
• Cetelem consumer loans
• Société Générale expansion in Central and
  Eastern Europe (Czech Rep., Poland, Hungary,
  Slovenia)
• Crédit Agricole acquisition of Emporiki in 2006
  (6th Greek bank)
• Acquisition in 2006 of Cariparma and Banca
  Populare Friuladria
• Crédit Mutuel Alsace acquisition of Citibank
  Deutschland in July 2008

15
The crisis

• The crisis are there opportunities?
• Crédit Mutuel Alsace acquisition of Citibank
  Deutschland in July 2008
• BNP Paribas acquisition of Fortis
• Merger of two major French groups Caisses
  dEpargne and Banques Populaires the merger is
  accelerated by the crisis and the losses of the
  two groups.
• Opportunistic buyouts since stock market crash
• Richelieu Finance by KBC in January 2008
• Buyout of stock trading company Potzamparc by BNP
  Paribas in January 2009
• Société Générale and Crédit Agricole
  Announcement of merger of asset management SGAM
  and CAAM in January 2009
• Regrouping of Calyon Financial and Fimat (SG) in
  2008
• Will international banks  return home ?
• BNPP has closed its branches in Ukraine with the
  problems in Eastern Europe..

16

• Employment

17
Employment
Employment in the principal banks in France since
1998
CECEI 31/07/2008
18
Employment
Evolution des statutes and kind of emplyment
Source AFB
19
Employment

• An evolution of employment practices
• Replacement by higher classification levels
  (66,4 of lowe levels in 2002 versus only 58,9
  in 2006)
• The qualification level (diploma) is increasing
  significantly (2 years and more after graduation
  of school increased from 26 in 1996 to 56 in
  2006, out of which 26 have made at least 4 years
  of studies)
• Substitution of support functions and back
  offices by salespeople

20
Good practices in banking mergers

• The legal framework

21
Before a merger

• There are not many possibilities for works
  councils to act before a merger - generally, the
  information level is low.
• However, since 2005, the law has enacted the
  obligation to have a previsional management of
  employment and competences. The aim is to prevent
  dismissals.

22
Merger Announcement

• In the case of restructurings, French labour law
  stipulates that there is an obligation to inform
  AND CONSULT works councils.
• The word  consultation  means that an
   advice  has to be given by the works council.
• This advice has to be taken into account by the
  management of the undertaking.
• Therefore, works councils must be given precise
  and relevant written information and sufficient
  time to analyse correctly the information (L.
  2323-4).

23
Works Councils and Trade Unions

• Respective roles
• Works councils
• Workers representatives are generally from TUs
• Works councils are consulted and give a motivated
  advice on economic and social aspects of the
  merger
• Trade Unions
• Trade Union representatives are responsible for
  the collective bargaining and negotiate
  collective agreements and the content of an
  agreement for collective dismissals

24
Consultation phase

• The information and consultation phase is very
  important
• This phase must be used for negotiating the
  coellective agreements of the new enterprise and
  all measures accompanying the merger.
• In this phase, the balance of power is in favour
  of the workers representatives because the
  employers objective is that the merger period is
  smooth and successful.
• Once the advice being obtained, the balance of
  power changes.

25
Consultation phase

• Restructurings put into play complex structures
  of enterprises
• Collective bargaining may happen at different
  levels
• Groups level of enterprise
• Different geographic entities
• The initial places of bargaining may become
  irrelevant.
• .
•  Accords de méthode 
• A new structure of bargaining, i.e. setting up
  a  committee of concertation , may be needed.
• This type of new structure enables to work
  together on
• The future plan of collective dismissals
• The future statutes and collective agreements of
  the new entity
• This type of structure also allows a follow up of
  the merger
• i.e. a place to receive information about the
  future organisation, new locations, and a
  possibility to make suggestions to management

26
Consultation of works councils

• French law gives works councils a consultative
  role in mergers and restructurings in the final
  phase
• What consultations ?
• L. 2323-6 The merger project and the
  organisation of the new entity - which could
  affect employment.
• L. 1233-1 (and following articles) all social
  measures to accompany the merger (Social plans,
  collective dismissals, i.e. dismissals of more
  than 2 people in a period of 30 successive days)
  
• Consultation modalties.
• Consultation must happen before the merger
• The two types of consultation are cumulative
• A consultation phase begins with the announcement
  of a merger or acquisition
• A consultation phase will be finished when the
  works council has given a final motivated advice
  on both economic and social aspects

27
Consultation phase

• The right of assistance of an expert
• In case of collective dismissals of over 9
  people, the works council may request assistance
  of an expert.
• The mission of the expert may consist in an
  economic analysis of the merger project, the
  social consequences, etc.
• .

28
Transfers of work contracts

• The transfer of work contracts is regulated by
  French labour law, based on the Council Directive
  2001/23/EC of 12 March 2001
• In French law
• L. 1224-1 employment contrats will be
  transferred to the absorbing enterprise
• All contracts full time, part time, in
  suspension because of maternity leave,..)
• Date of transfer date of  real  absorption.

29
Collective Dismissals

• Collective dismissals are regulated by French
  labour law L. 1233-1 and following
• Obligation to consult the works council (cf
  previous sides)
• The content of the  plan de sauvegarde de
  lemploi  (job safeguarding!!) will be
  negotiated with the workers reps, i.e. the TUs
  (although legally the decision is the employers
  after consultation of the works council)

30
Collective agreements

• Obligation to collective bargaining
• L. 2261-14 the collective agreements are bound
  to be renegotiated those of the transferor
  enterprise do not apply automatically to the
  transferee.
• In case of absence of negotiation, they will
  become ineffective after a period of 15 months (3
  months notice 12 months)

31
Good practices in banking mergers

• Good Practices

32
Good Practices

• Inside the Trade Union
• Contact the TU federation in order to be put in
  contact with TU section of the other bank
• the collective agreements of the two enterprises
  need to be compared
• Set up concertative commissions between
  representatives of the two entities
• Need to negociate trade union rights (the social
  mandates of the TU representatives of the
  absorbed enterprise disappear once the
  negociation is done)

33
Good Practices

• Inside the Trade Union
• Relations between the different sections of the
  Trade Union (i.e. CFDT)
• The credibility of TU sections in enterprises
  are largely determined by its capacity to work
  together. This determines the force of its
  proposals and the negociation strategy. It is
  necessary to work together in a perfect agreement
  and to let this know the employer, the employees
  and other TUs
• Relation with other TUs (France has more than
  one!!!)
• Inter-TU relations have to be useful for the
  advancement of the strategy of CFDT, but not
  avoid any TU to express its views

34
Good Practices

• A merger may be an opportunity for social
  dialogue and collective bargaining
• What?
• All collective agreements
• Where?
• At the undertaking which becomes the employer
• Who?
• The workerss representatives of the transferee,
  in accordance with the workers reps. of the
  transferor

35
Good Practices

• A merger may be an opportunity to negotiate
• How?
• By comparing the different agreements
• By making innovative proposals
• change opportunity !
• By keeping constant contact with the employees in
  order to detect their needs

36
Good Practices

• To be avoided
• Defending solely the advantages of ones initial
  enterprise
• Being absorbed in TU disputes between the two
  enterprises
• Getting involved in the power issues of
  management.

37
Good Practices

• Exemples
• Reduction of wage differences between the two
  firms
• Improvement of social coverage (mutuelle)
• Transport cost indemnities
• Assistance to move house (monetary)
• Working time adjustments
• .

38
Good practices in banking mergers

• Good Practices - Communication

39
Good Practices - Communication

• Communication - A central issue!!!
• In times of troubles, employees need to be
  comforted and re-insured
• Collaboration between the TU of the the two
  enterprises is essential
• Content
• Useful information on negotiations, new issues,
  reorganisations, etc
• Analysis from the point of view of TU
• TU proposals

40
Good Practices - Communication

• Communication - How
• Internet
• Newsletter
• Flyers
• E-mail to members only
• Monthly publication
• Questionnaire
• Its a lot of work, but it is worth it

41
Good Practices - Communication

• Communication dos
• Regular feed-back from members
• Work together with TU from other enterprise
• Communication donts
• Systematic obstruction or opposition
• Communication is one of the most important
  elements of TU strategy

42
Good Practices - Communication
43
Good practices in banking mergers

• Good Practices Health at Work

44
Health at Work

• Psychology
• Times of trouble for employees
• Increase of stress
• Adjustment of work load (often in the sense of
  more work)
• ORGANISATION OF WORK is crucial

45
Health at work

• How to use the Committee for Safety and Health at
  Work
•  Document unique 
• The prevention of stress should be at the charge
  of the employer

46
Good practices in banking mergers

• Good Practices Europe

47
Europe

• European Works Councils - The BNP Experience
• 1) Banca Nazionale del Lavoro
• Adjustment of EWC agreement (representation of
  Italian members)
• 2) Fortis
• Work together (Workers representatives and TU
  level)
• Exchange of information verify absence of
  double tongue at Management level
• Show unity - Common statement of French and
  Belgian TUs

48
Europe

• European Works Councils - The BNP Experience
• At workers representative level
• Work sessions on EWC agreement
• Modalties of the merger
• At TU level
• Bilateral work with Belgian TUs
• Work with other French Unions
• Common statement French and Belgian TUs

49
Europe

• Workers representatives
• Manage transition period of existence of two
  EWCs
• Negociations of EWC agreement
• Trade Union level
• Negociations of in EWC and discussions between
  the 8 partners
• Define interrelations between French and Belgian
  TUs
• Creation of a European TU alliance in BNP Paribas