Reuters: Financial Services and Real Estate: 3CIF bond suspension sparks merger rumours

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3CIF bond suspension sparks merger rumours May 9th 2012, 10:03 Wed May 9, 2012 6:24am EDT (Adds additional codes, removes erroneous dual attribution in paragraph 12) * 3CIF senior unsecured bonds widen over 100bp * AMF confirms suspension of 3CIF covered bonds * Caisse d'Epargne, Banque Postale rumoured as takeover candidates By Aimee Donnellan and Jean-Marc Poilpre LONDON, May 9 (IFR) - Caisse Centrale du Credit Immobilier de France's (3CIF) suspension of several of its covered bonds on Monday has caused its senior unsecured bonds to widen and sparked rumours of a possible merger with another French bank. On Wednesday the French Financial Markets Authority (AMF) confirmed to Reuters that it had requested that the issuer suspend trading of a number of covered bonds. Several market sources said this was because it had failed to submit its accounts by the April 30 deadline. At the same time, the group is heard to be facing a three-notch downgrade by Moody's. 3CIF was not immediately available for comment, while an AMF spokeswoman said: "We are not commenting other than to say that we confirm the suspension of the bonds, ahead of an announcement from the issuer. The AMF is following this dossier (matter) as part of its role to ensure the correct functioning of the market." On Wednesday morning 3CIF's senior unsecured bonds widened initially by around 30bp, according to Tradeweb at 0910GMT. Notes have continued to move wider, with very large bid/offer spreads. The 3.75% March 2014 issue was last 106bp wider at 330.5/284.6bp. The bank has been under close scrutiny for months with the regulator having ordered it to boost its capital, according to Mediapart, a French news website. Mediapart also said the Bank of France has indicated that it would provide all the liquidity banks in general may need. A takeover of 3CIF by Banque Postale is the favoured option. But until now, 3CIF has so far resisted the move. Caisse d'Epargne, part of the BPCE Group, and Banque Postale, which is currently looking to grow its retail covered bond business, are strong possibilities for a merger, a source on Wednesday said. "There is persistent negative news surrounding 3CIF that cannot be without foundation," said a senior official at a French bank. "It's possible that 3CIF will be bought by another group." Another banker said that because 3CIF is almost entirely funded through wholesale markets, this is leading the market to think that there is a black hole in the issuer's funding that is likely to be announced. Suspension of covered bonds is considered highly unusual by market participants, who say it is usually to prevent a mass sell-off of bonds from retail accounts. "3CIF are almost entirely reliant on wholesale funding so these kinds of rumours could make it very difficult for them to continue with their business," said a banker. (Additional reporting by Lionel Laurent in Paris,; editing by Alex Chambers and Julian Baker) Link this Share this Digg this Email Reprints

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