This record is a partial extract of the original cable. The full text of the original cable is not available.

161142Z Dec 05

UNCLAS SECTION 01 OF 02 PARIS 008490 
 
SIPDIS 
 
SENSITIVE 
 
PASS FEDERAL RESERVE 
PASS CEA 
STATE FOR E, EB, EUR/WE 
TREASURY FOR DO/IM SOBEL, RHARLOW, LHULL 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
LABOR FOR ILAB - WBRUMFIELD 
USDOC FOR 4212/MAC/EUR/OEURA 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV FR
SUBJECT: BANKERS SHARE DISCONTENT 
 
 
SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET 
 
¶1. (SBU) SUMMARY: Several senior French bankers have 
emphasized to the Ambassador their frustration at the slow 
pace of French structural reforms, albeit with grudging 
admiration for the efforts of Finance Minister Breton.  They 
forecast continued weak GDP growth in 2006, and note the 
importance of 2007 elections for France's economic future. 
END SUMMARY. 
 
¶2.  (U) On December 12, the Ambassador met with BNP Bank CEO 
Baudouin Prot, and on December 13, with Lazard Bank 
President Bruno Roger, to discuss the banking sector, the 
economy, and the political landscape.  In France, the 
banking sector is dominated by six banks, of which BNP is 
one of the leaders in the retail banking sector, and Lazard 
in investment banking.  BNP Paribas is the largest French 
bank and the second largest Euro-zone bank in terms of 
market capitalization.  In 2004 it ranked 48th on Fortune 
Magazine's list of the world's 500 largest companies, above 
Deutsche Bank, Bank of America, UBS, and JP Morgan.  It 
gained notoriety for its role in the UN oil-for-food program 
for Iraq.  BNP has an important U.S. presence in the western 
U.S. and Hawaii. 
 
¶3.  (SBU) For BNP, CEO Prot noted that 2007 elections in 
France are crucial to the pace of future reform and economic 
growth.  Prot had grudging praise for Finance Minister 
Thierry Breton's efforts, particularly his "excellent 
proposal" to reduce France's wealth tax to 40 percent and 
cut other taxes.  Reform efforts overall are constrained by 
the current political situation, however, and France must 
vote for reform in 2007.  Like many of our senior business 
contacts, Prot believes that Nicolas Sarkozy offers the best 
hope for change.  In Prot's view, "economic patriotism" 
should mean market-oriented economic policies that bring 
growth. 
 
¶4.  (SBU) Lazard President Roger expressed disappointment 
with the Chirac government, noting that he should have 
capitalized on his overwhelming victory to push through 
needed reforms.  For Roger, the number one priority is labor 
reform, specifically to undo the 35-hour workweek.  Tax 
reforms, and reduction of the size of the French government, 
are also needed to stimulate French GDP growth rates beyond 
the 1.5% forecast for 2005. 
 
¶5.  (SBU)  For the banking industry in particular, the 
recent decision by the European Central Bank (ECB) to raise 
interest rates casts a shadow over growth prospects.  Roger 
commented that he has known Jean-Claude Trichet, the ECB 
Chair, for a long time, and had invited him to lunch a few 
weeks ago to try to dissuade him from raising interest 
rates, but Trichet has a deeply ingrained contrary streak. 
The ECB is obsessed with inflation fears, due to the rise in 
energy prices, and so growth throughout Europe is certain to 
suffer as a result. 
 
¶6.  (SBU) Regarding the political landscape, Roger appeared 
not too concerned about whether the left would return to 
power in 2007, arguing that despite their public 
pronouncements, all the potential political candidates would 
follow more or less the same economic policies. 
 
BIO NOTES: 
 
¶7.  (SBU) Baudouin Prot (DOB 24 May 1951) has been CEO for 
BNP Paribas since March 2000, when he was first elected to 
BNP's Board of Directors.  He is also a Director of Pchiney 
Veolia Environnement, a member of the Supervisory Boards of 
Pinault-Printemps-Redoute and Cetelem, and the permanent 
representative of BNP Paribas on the Board of Accor.  He 
speaks English well, if not fluently, and has an American 
spouse.  He is well-disposed towards the United States, and 
a believer in France's European future. 
 
¶8.  (SBU) Bruno Roger, (PDOB August 6, 1933; Boulougne- 
Billancourt France), joined Lazard in 1954.  He has been 
President of Banque Lazard Freres since 2002; Managing 
Director and member of the Global Executive Counsel of 
Lazard LLC in New York since 2000; and Co-President of the 
European Board of Directors as well as Chairman of the 
Global Investment Bank of Lazard since 2005.  Within the 
Lazard Group, he is a member of the Supervisory Board of 
Eurazeo (having been Chairman until July 2003).  He is also 
a Director of Cap Gemini Ernst & Young and of Sofina 
(Belgium), and a member of the Supervisory Boards of AXA and 
Pinault Printemps Redoute.  He completed his term on the 
Board of Directors of Saint-Gobain in 2005.  He is widowed 
from his first wife, Madeleine Simon, with whom he had two 
children.  He remarried in 1996 to Martine Aublet.  He 
speaks fluent English.  He appears to be in relatively frail 
health, and so our guess is that he probably will not remain 
at the helm of Lazard Bank very much longer. 
STAPLETON#