SWF Radar France

Thomson Reuters reports that, “Countries including France need to be pragmatic and open their arms to sovereign wealth funds but must tread cautiously to weed out the good from the bad, the chief executive of state bank Caisse des Depots said on Wednesday.”

Thomson Financial reports that, “French President Nicolas Sarkozy said he intends to make state-owned bank Caisse des Depots et Consignations (CDC) into a sovereign fund.”

AFP reports that, “French Economy Minister Christine Lagarde said Thursday it would be a good idea to hold a meeting of sovereign wealth funds to help clear suspicions about their role and send a signal they were welcome in Europe. Lagarde said that when France holds the presidency of the European Union in the second half of this year would be an opportunity ‘to reflect on the best way to integrate these new players.’”

Thomson Reuters reports that, “Sovereign wealth funds are key investors which France needs to attract but states where such funds are based must be open to French investment in return, a report prepared for the Economy Ministry said on Thursday. Economy Minister Christine Lagarde said France would during its six-month EU presidency, which begins in July, invite representatives of sovereign funds and other European Union countries to discuss some of the report’s suggestions.”

Xinhua reports that, “French Minister for Economy, Finance and Employment Christine Lagarde has authorized an economist to conduct a research and assessment on Sovereign Wealth Funds (SWFs)in France for the government’s strategy towards the SWFs, announced the ministry on Wednesday.”

Reuters reports that, “France and Britain differ over whether the European Union needs its own response to sovereign wealth funds as well as a globally agreed industry code of conduct, an EU diplomat said on Monday.”

Thomson IM writes (free subscription required) that:

In order to compete with increasingly aggressive sovereign wealth funds from Asia and the Middle East, some developed countries are considering setting up their own national champions, although results are likely to be mixed at best.

Major industrialised countries have long been in a bind over how to treat foreign state-owned investment funds: they want the money to ride out what is a developed-world financial crisis but they could also do without the political strings attached.

Now, both France and Japan have said they are looking into the option of setting up their own sovereign wealth funds (SWF) to promote more active investment and higher returns for public money.

At the beginning of January even the UK’s shadow chancellor hinted that a future Conservative government might look at creating some kind of sovereign fund for the country. With the City of London currently on a path to becoming the preeminent manager of the world’s sovereign wealth, it’s not as if the UK would lack the expertise to run such a fund.

The Independent reports that, “Christine Lagarde, France’s economy minister, may establish a French sovereign wealth fund to counter the rising power of the state-owned funds from the developed world. In a debate on French television, Mme Largarde called the idea ‘seductive’ and said she was thinking of creating a French fund. Such a move would represent an astonishing volte face from the country that has been one of the harshest critics of SWFs, many of which are controlled by Middle East and Asian governments in the developing world and have become increasingly active in Europe and America.”

The article adds that, “Mme Lagarde said a French SWF could be formed by hiving off some funds from the Caisse des Dépôts et Consignations (CDC), the massive state pension fund manager. The idea emerged from a report commissioned by M. Sarkozy into ways to increase France’s economic growth.”

The Financial Times reports that, “President Nicolas Sarkozy on Wednesday gave his backing to a far-reaching plan to liberalise the French economy and raise its trend rate of growth to 3 per cent within five years. … Although the commission [that formulated the plan] argues its recommendations are broadly cost neutral, it is counting on the Caisse des Depôts et Consignations, France’s sovereign wealth fund, to help finance ten new university ‘centres of excellence’ and universal access to super high-speed internet services by 2016.”

Reuters reports that, “In a speech to his ruling UMP party, Sarkozy said he supported globalisation but could not accept the fact sovereign wealth funds from some countries could buy French companies when French firms were not free to invest in those countries.”