Scope assigns an Issuer Rating of AA- to Crédit Foncier de France (‘CFF’) with a Stable Outlook, and an identical rating and outlook to its key issuing subsidiary, Compagnie de Financement Foncier (‘CoFF’). Both mirror those of CFF’s parent, BPCE SA (‘BPCE’).

BPCE SA is the central body of the two large French banking groups, the Banque Populaire (BP) – cooperative banks – and Caisses d’Epargne (CdE) – savings banks. CFF’s subsidiary CoFF’s sole purpose is to act as a covered bond issuer financing the mortgage and public-sector lending of both CFF and the whole BPCE group, with covered bonds (obligations foncières).

In June 2018 it was announced that from early 2019 new lending that now flows through CFF will be conducted by other entities within Groupe BPCE, to create efficiency savings. CFF will continue to manage its existing loans, and CoFF will continue to refinance the Group’s public-sector financing activities. From 2019 CFF’s balance sheet is expected to shrink gradually as existing loans roll off. Both ratings were affirmed on 2nd July 2018.

This flows from the fact that, crucially, CFF and CoFF will still carry the status of affiliates within the Group, and CoFF, the issuer of covered bonds, will remain as a strategic subsidiary. Affiliate legal status supports equalisation of both Issuer Ratings with those of BPCE SA.

CFF and CoFF both benefit from an internal guarantee and solidarity within Groupe BPCE. BPCE SA must guarantee the liquidity and solvency of all its affiliates. As a shareholder BPCE is obliged to draw on its own capital resources. Beyond this it would use its own mutual guarantee fund, and subsequently could draw upon the BP and CdE networks’ guarantee funds. The three funds have nearly EUR 1.3bn of funds available for immediate distribution (as of 31 December 2017). If all these sources were to be exhausted, additional sums would be requested from all member banks of the BP and CdE networks. Groupe BPCE’s aggregated Tier 1 capital may be used to cover financial failings of any affiliate.

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