French banks will not raise banking fees for household customers in 2019 and will cap overdraft fees for the most vulnerable following a meeting with President Emmanuel Macron amid social unrest in France ignited by rising fuel taxes.
Macron met with the CEOs of France's largest banks — Société Générale SA, BNP Paribas SA, Crédit Agricole SA, Groupe BPCE, Confédération Nationale du Crédit Mutuel and La Banque Postale SA— and the head of the French Banking Federation to discuss how the banking sector could help the country through its current crisis and improve living standards.
Macron's office said the freezing of bank fees and the capping of overdraft fees at €25 for vulnerable customers would represent between €500 million and €600 million in purchasing power. The French Banking Federation said it would be up to individual banks to fix the cap.
Response to 'yellow vests'
The government has had to respond to the "gilets jaunes" or "yellow vests" movement, named after the high-visibility vests worn by protesters who have taken to the streets throughout France to protest against a rise in fuel taxes in 2019.
The movement, which mushroomed on social media, has evolved into a general discontent against high taxes, low salaries, weak purchasing power and Macron himself, with some demonstrators calling for his resignation. Demonstrators have blocked roads throughout the country and the protests have turned violent in Paris and other French cities, with cars set alight, the windows of businesses smashed and shops looted. Police have fought back with tear gas and water cannon.
Economic growth hit
Macron also asked banks to support small businesses as they had been among the hardest hit by the crisis. Finance Minister Bruno Le Maire told RTL radio Dec. 10 that the protests would chop 0.1% off fourth-quarter growth as businesses have suffered a loss of trade due to blockades and damage related to the protests. Le Maire declined to backtrack on the government's growth target of 1.7% for 2018.
The president also urged banks to take part in a national consultation that will run from Dec. 15 to the beginning of March 2019, and explore ways of making it easier for people to obtain loans to help finance the purchase of more environmentally friendly cars or boilers for heating. The French Banking Federation said banks were committed to offering preferential rates for loans, through lower interest rates, insurance or administrative fees. Banks will offer full financing for the acquisition of a new car and will offer an advance of a government incentive for people buying environmentally friendly cars.
Macron's concessions
France has a history of violent street protest in times of discontent, and Macron had said he would not give in to the street. But on Dec. 10 he addressed the nation on prime-time television and said he would raise the minimum wage by €100 a month and cancel a planned rise in social security payments for pensioners. Overtime pay will not be taxed, and Macron has asked employers who are able to pay a tax-free year-end bonus to their employees. The government had earlier backed down over the rise of the fuel tax in 2019.
Rising petrol prices have propelled the protests, with diesel up 23% between October 2017 and October 2018 and petrol up 15%, according to Le Point. Plans by the government to increase carbon taxes as part of its strategy to make its economy greener and encourage motorists to buy more environmentally friendly cars were what pushed protesters over the edge, as it would have led to a rise of 6.5 cents a liter on diesel and around 3 cents on petrol in 2019, according to Capital, citing figures by the French Union for Petrol Industries.