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Although the proposed deal is said to please the country's government, the acquisition talks between troubled mortgage lender Crédit Immobilier de France (CIF) and La Banque Postale, the French post office's banking unit, is raising eyebrows.
With the mortgage lender having hit the headlines after requiring help to avoid a collapse, a union of the two might feel like déjà vu.
"The tendency of European governments to resolve a troubled bank by merging it with others, healthy or distressed, faces large risks as the case of Bankia and the Spanish cajas shows," Ulrich Hege, finance professor at French business school HEC Paris, told SNL Financial.
So why press ahead?
Despite what its management might believe behind the scenes, La Banque Postale public relations' take is that in light of its own strategic plan, the deal has merit. Notably, a tie-up with CIF would increase its mortgage lending book, to [euro]75 billion from [euro]41 billion, something analysts at RBS said in a June 19 note that La Banque Postale has been keen to do....