France: Financial Sector Assessment Program-Technical Note on Supervision of Financial Conglomerates and Less Significant Financial Institutions

International Monetary Fund

No 2025/239, IMF Staff Country Reports from International Monetary Fund

Abstract: Most systemically important French banks also head conglomerates. Financial conglomerates soundness is therefore crucial for France's financial stability. By integrating banking, insurance, and other services, conglomerate structures enhance business opportunities, provides diversification benefits for these groups but may also introduce further complexity and increased financial risks and induce risks that are not necessarily fully captured under applicable sectoral regimes. These conglomerates are mostly regulated under European Union (EU) rules and Single Supervisory Mechanism (SSM) standards, whose rulebooks determine the extent the financial stability risks arising from financial conglomerates’ operations can be managed and mitigated, in a timely and effective manner, in France. Robust capital adequacy, governance, and risk management regulations, along with effective supervision, are crucial to accurately assess risks and ensure that sufficient capital is maintained to cover potential losses. For supervision, strong legal powers to implement and enforce necessary measures are critical to mitigate potential impacts on France's financial stability and protect the interests of stakeholders. Due to the supplemental nature of financial conglomerate supervision and the structure of financial conglomerates in France, it is essential to emphasize that the developments discussed in this technical note regarding financial conglomerates should be considered as complementing the assessments of the banking regulatory and supervisory framework outlined in the assessment against the Basel Committee for Banking Supervision (BCBS) Core Principles for effective banking supervision conducted within the Euro Area FASP and the Detailed Assessment of Observance of the International Association of Insurance Supervisors (IAIS) Insurance Core Principles in France.

Keywords: markets in financial instruments directive; market landscape; markets authority; securities commission; markets in financial instruments regulation; Financial conglomerates; Financial conglomerates supervision; Capital adequacy requirements; Financial sector stability; Insurance; Global; Europe (search for similar items in EconPapers)
Pages: 54
Date: 2025-08-29
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