The JDD. You have been at the head of LCL since January 1st and have devoted the last few months to touring the agencies in France. What feedback have you gained from this?
Serge Magdeleine. I met nearly 2,500 employees in direct, unfiltered meetings to get an idea of the company and the way we work internally. I was impressed by the entrepreneurial culture of this bank which, for 160 years, has embodied the bank of French industrialists. Another striking trait: his resilience. Crédit Lyonnais has gone through challenges, particularly in the 1990s, and has emerged strengthened. Today, LCL is a solid, dynamic and profitable bank, with good cost control. In summary: it is a very great company supported by 16,400 employees!
The other challenge of this tour of France was to question the country's great aspirations. I remember three. The first: the country is turning massively towards entrepreneurship. Barely fifteen years ago, 250,000 businesses were created in France per year. A million were created last year. Second lesson, the necessary shift into the energy transition and decarbonization at a forced march. This summer again, factories had to close due to lack of water resources, etc. Third major challenge: the acceleration of digitalization linked to the arrival of artificial intelligence tools.
Of these three challenges, the energy transition seems the most effective, how can we approach it?
It is urgent to decarbonize industrial tools and transport, while protecting ourselves from climate shock and supporting all our customers in this transition. It is all the more complex because decarbonizing takes time. We will only reap the benefits in ten or twenty years: it is a necessary long-term effort. And this transition must be carried out according to a fair distribution of efforts, so as not to increase social inequalities.
The rest after this ad
Which bank is LCL today? A retail bank? A bank serving VSEs and SMEs?
We manage the accounts of 6,100,000 individual customers and 400,000 business customers in the broad sense, liberal professions, craftsmen, traders, VSEs. We also support 31,000 large SMEs and ETIs (mid-sized companies). When it comes to breakdown of the number of accounts, we are the bank for individuals. Regarding the volume of credits, it is balanced: 100 billion euros benefit households and 70 billion for businesses. Conclusion: LCL is a universal bank that supports both individuals, more focused on wealth, and businesses.
SMEs and ETIs are emerging from a period of high inflation and must, in addition, repay the state-guaranteed loans granted. during Covid. Their access to credit is becoming increasingly strained. How do you respond to it?
We are living in a period of “post-Covid triple normalization”. Monetary normalization first: central banks are withdrawing the liquidity that they had massively injected to overcome the Covid-related confinement. Secondly, economic normalization with the return to inflation below 2%, thanks to the increase in interest rates decided by central banks. One of the immediate consequences of this sudden increase was to desolve certain households and certain businesses which were desolvent during periods of low rates. Finally, budgetary normalization with the need to reduce public deficits. This triple standardization naturally affects our economy.
“We are seeing a drop in demand for credit”
Does this mean that small business owners should expect a tightening of the screws when it comes to access to credit? Cash flow flexibility?
No turn of the screw at LCL, no! The bank continues to support all its customers. What we are observing is a drop in demand for credit. Several factors explain this. The first, the rise in rates. When a company borrows at 5%, it has fewer financeable projects than when it borrows at 2%. Second element: the sluggishness of demand. Companies have declining order books, so they invest less. Added to these two structural factors is a third element: fiscal instability.
This week, during an LCL event bringing together nearly 500 business leaders, I was able to measure how much the fiscal instability linked to the debate on the finance bill has them wondering: should I invest now? Shall I wait ? Many are waiting and waiting! Clear and consistent rules of the game over time are essential to the development of our economy.
Are you concerned about the government's tax intentions?
It is not up to me to make arbitrations. Our businesses need long-term visibility. And as such, it seems important to me that France moves from a 2030 action plan to a real “2030 business plan”, to think about “business France”. Where do we want to invest? To create what wealth? I am thinking in particular of all these companies which generate enormous added value, in particular thanks to technology, whether we call it “XTech”, “biotech”, “medtech”, “cleantech”, “fintech”…
Are we planning a strategic plan to invest massively in their development? Why is this important? Because when it comes to tax revenue, there are two levers: broaden the tax base or increase the rate. We talk a lot about the second, rarely about the first. However, the risk is that by excessively increasing the rate, we will reduce the base. Preserving businesses with high added value is one of the ways to create more wealth in France and mechanically generate more tax revenue.
“It is important that France succeeds in restoring its public finances”
Coming back to taxation for 2025, Michel Barnier calls for an effort of solidarity with large companies. Do you fear a tax on bank superprofits?
It is important that France succeeds in restoring its public finances. LCL is a French company that pays its taxes in France and will continue to do so. At this stage, we have no concrete information to precisely calculate the impact on LCL. It seems wrong to me to speak of “super profits” for the bank, because this notion induces profits of an exceptional nature, which is not the case. This term is also a paradoxical injunction. The banking sector regulator, a public authority, requires us to accumulate ever more capital. How do we get them? Either by raising capital that must be remunerated, or by capitalizing future profits.
Mechanically, the regulator forces us to make profits. And on the other hand, we should define profit compartments, some of which would be too much? The role of a bank is to finance the economy. Cutting profits also means depriving the economy of this support. Even beyond banking activity, my entrepreneurial clients tell me of their great doubts about the concept of “exceptional taxation of super profits”.
What is true for businesses is true for individuals? Does a surcharge, even one-off, for higher incomes seem ineffective to you?
That there is a form of solidarity from those who, I was going to say, can contribute the most, that is understandable. The question is “to what degree”? The sovereign law in the business world is as old as economics: “Too much tax kills tax.” » Let us be careful not to dissuade entrepreneurs from investing in France. The questioning of the Dutreil pact – which allows the transfer of a family business to be massively exempt from inheritance fees – was raised. Going back on this pact would lead to most of our great family businesses being sold to foreign firms. Is this what we want?
The real estate market is suffering, whether in the construction or purchasing sectors. Do you see an improvement?
I detect two encouraging signals. The first, intentions to purchase apartments or houses have picked up in recent weeks. The second: we are recording an increase in the number of loan simulations, which foreshadows a concrete recovery in home loans in the coming months. The drop in rates should also encourage this recovery. In this regard, I would like to emphasize that the French fixed rate model has protected French borrowers very effectively.
In Italy or Spain, households borrow at variable rates. When they jump by 1 to 3%, the monthly repayment explodes. For LCL, we have protected our borrower customers from paying an additional 3 billion euros over the last two years if they had variable rates.
Is this French banking model threatened? Weakened?
Since 1988, the constraints linked to the regulation of Western banks put in place by the Basel Committee, under the aegis of the Bank for International Settlements, have piled up depending on the crises. We are in the fourth wave. This risks leading us little by little towards an Anglo-Saxon model in which it will become mechanically necessary to sell our credits or move to the adjustable rate system. However, the protective model of fixed rates in France has already proven its worth!
“We are going to increase our activity towards the new economy: startups and tech”
In this uncertain context, what course are you going to give to the LCL liner?
I told you, what strikes me is the extent to which France is moving into entrepreneurship. The main vocation of LCL is to be the bank of those who undertake in the broad sense, and this is a positioning that we will accentuate. This concerns the craftsman, the tradesman, the everyday entrepreneur, the self-employed, the famous “slasher” who is an employee during the day and an interior designer in the evening.
He is also the one who does something for the planet by installing a photovoltaic roof on his house himself. Or the one who undertakes for his assets in a rental investment to finance his retirement… One in two French people say they are tempted by entrepreneurship. It’s a very large and exploding market. We will be the bank of France that undertakes.
Concretely, how will this translate?
We are going to increase our activity towards the new economy, startups and tech. We are thinking about solutions that will take into account the privacy of those who do business, which is completely innovative. Example: an entrepreneur who develops an activity with high added value but finds himself prevented because he has to settle in Paris, we will help him finance his home to enable him to get his project off the ground. We will also rely on advisors specialized in major areas: logistics, heavy industry, tech, etc. In order to speak the same language as our clients depending on their field of activity.
Starting next month, we will set out to meet this France which is undertaking to refine our reorganization from the ground up. We start on December 11 in Lyon, in the historic agency created by Henri Germain. And we will finish in Paris in May. Six months of discussion with 10,000 entrepreneurs and all LCL employees, to calibrate our offers and advice for the benefit of this entrepreneurial France.
Christine Lagarde, President of the ECB, is concerned about Europe's slipping away from global economic competition. Do you share this observation?
No one can boast of their own turpitude: the United States innovates, the Chinese industrialize and the Europeans regulate. We are coming out of ten years of hyper-regulation in everything: ban on thermal cars in 2035, five European laws on technology (Digital Markets Act, Digital Services Act, Data Act, Governments Act, IA Act). All of these regulations taken in isolation are relevant. Their multiplication tends to constrain the economy and induce a disconnection, already palpable, of Europe at the global level.
