Heads are again rolling at the top of some of Europe's biggest banks, though perhaps strangely, not yet Britain's. The latest to face the axe is Georges Pauget, chief executive of Crédit Agricole. His chairman, René Carron, may go too at a board meeting scheduled for next week. Both are threatening to resign in a stand-off with regional shareholder banks. Already gone is Jean-Paul Votron, chief executive of the Belgo-Dutch bank Fortis.
In both cases, there have been distress rights issues and cancelled dividends. For Fortis, there is a double sin. Having paid a top of the market price for its share of ABN Amro less than a year ago, it was still insisting until only a few months back that the dividend was safe and there was no need for another rights issue.
At Crédit Agricole, M. Pauget reckons he can face down his critics, but he's certainly got a battle on his hands. By British standards, Crédit Agricole is a very curious animal indeed. Part mutual, part publicly quoted, it is in essence a federation of numerous little farmers' co-operatives. Collectively, these regional banks exercise control over the umbrella company through Les Caisses Régionales.
They've got good reason to be up in arms. Here's a bank whose purpose is ostensibly to look after the horny-handed men of toil in farming communities up and down France, yet it was out dabbling in things it didn't understand and has now had to be rescued from the consequences of its own folly by the people it was meant to represent.
Interestingly, much of American banking regulation, before it was dismantled, was similarly designed to prevent "local" money from escaping the communities which created it into the hands of the snake-oil salesmen of Wall Street.
The anger of the Crédit Agricole federation is entirely understandable. Despite their best endeavours, their capital has been squandered on American sub-prime mortgages and other questionable forms of tradable debt.Reuse content