Georges Pauget’s recent book is called Should We Burn the Bankers? But the outgoing chief executive of Crédit Agricole has no intention of fanning the flames of controversy after 36 years’ service at the second-biggest lender in France.
Asked if he is retiring sooner than planned after just four years in the top job, the 62-year-old told the Financial Times: “For me, six months earlier or later does not matter ... I have finished my job.”
Mr Pauget was expected to stay until the end of next year but will be replaced in March by Jean-Paul Chifflet, head of one of Agricole’s most powerful regional banks.
Agricole is France’s biggest retail bank, with a 28 per cent market share and, in market value – its €32bn ($48bn) is slightly higher than when Mr Pauget took over as chief executive – it has caught up with Société Générale, making them joint second to BNP Paribas’s €64bn.
The mutual bank is majority-owned by its 39 regional banks – or caisses – and friction between the local barons and the outward-looking publicly quoted bank’s management is recurrent.
Asked if he stepped down early because of tension with the caisses, Mr Pauget pauses and says: “I’ve said all I wanted, no more.”
The “green bank” began in the 19th century by lending to farmers and, even today, each regional caisse is headed by an executive banker presided over by a farmer or local businessman.
In spite of their agricultural roots, the caisses regard themselves as judicious bankers and lose patience at perceived profligacy at the quoted bank, of which they own 54 per cent.
The regional barons were furious at having to stump up for the €5.9bn rights issue launched by Mr Pauget in May 2008, especially because it was mainly to repair the damage done by Calyon. The group’s investment bank had suffered heavy writedowns – to date about €6.5bn – by rushing into high-yielding risky assets, and was caught out by the US subprime meltdown.
Such was the bad blood that Mr Pauget demanded the board give him a vote of confidence in July last year. The two sides struck a deal: Mr Pauget would steer the bank through the financial crisis and then step down; and the caisses would stop backbiting.
It appears that the plan has broken down. The final straw was a leak that Mr Pauget was studying a merger plan with SocGen and French insurer Groupama, an idea some of the regional barons oppose.
With profits up in the three months to the end of September from the previous three months, and favourable trends in the fourth quarter, Mr Pauget can argue his job is over.
“I have done a complete revamping of the group and prepared it to be in good shape at the end of the crisis,” he says.
Mr Pauget’s two main goals when he became chief executive were to extend the bank’s international reach and to expand Calyon by making it more profitable and expanding its equity derivatives business.
On the first, he has achieved his target of raising overseas revenues from 35 to 50 per cent of the total. He bought stakes in banks in Egypt, Greece, Ukraine and Italy – with mixed results, as the third quarter’s €485m writedown at Emporiki, the Greek lender, demonstrated.
But rapid expansion led Calyon into risky investments and plunged the investment bank into loss in 2007 and 2008, for which Marc Litzler, chief executive, paid the price by resigning in May 2008. Its activities have been cut back and refocused on less risky areas, such as brokerage, structured finance and fixed income.
For now, Mr Pauget says he is focused on finishing his job at Agricole. But brooding on the financial crisis has brought out his academic bent – he has a doctorate in econometrics. His second book, The Post-Crisis Bank, published on Thursday, deals with the shape of the universal bank – combining retail with investment banking activities – and better ways of evaluating risk.
It is more technical than his last book. Should We Burn the Bankers? was a didactic book aimed at explaining banking to a general audience and persuading them that regulators, central banks, accountants and especially politicians share the blame for the financial crisis.
Any regrets? “No interest for the past – just for the future,” Mr Pauget says. “I am thinking about a third book.”