Four largest French banks diminish wholesale funding reliance and improve liquidity reserves

France's four largest banks -- BNP Paribas, Société Générale, Groupe Crédit Agricole and Groupe BPCE -- have successfully made progress in reducing their reliance on wholesale funding and enhancing their liquidity reserves, says Moody's Investors Service in a report published today.

"A combination of strong deposit and subdued loan growth, as well as deleveraging in some investment banking activities, has reduced French banks' reliance on wholesale funding," says Alessandro Roccati, a Moody's Senior Vice President and author of the report.

The four banks' wholesale funding needs are now close to those of international peers, although they remain among the largest wholesale borrowers.

Over the next few years, Moody's expects that the quality of wholesale funding will continue to improve, mostly due to an increase in less volatile long-term borrowing.

The four banks have also considerably strengthened their liquidity reserves, which now provide a much greater buffer against periods of market instability than in the past. These reserves (relative to short-term market funds) are now broadly in line with those of their major European competitors for the first time.