FRENCH BANK TO LOAN TAHITI BANK $39 MILLION

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PAPEÉTE, Tahiti (Tahitipresse, Aug. 28) - A private French commercial bank has signed an agreement with the Socredo Bank, loaning Tahiti's public development bank up to 3.6 billion French Pacific francs (US$39.4 million) in what was described as a "classic" refinancing operation.

The agreement, signed Friday at the French Polynesia presidency, came on the eve of the scheduled capital entry in Socredo by the private French bank, known as BRED, one of France's biggest regional banks within the Banque Populaire Group.

However, instead of the 25 percent capital stake announced for BRED in February, it looks like the French bank will start off with a 15 percent stake.

As for the loan, James Estall, Socredo's director general, explained, "It is about a classic line of credit. Socredo has some 140 billion French Pacific francs (US$1.5 billion) in deposits . . . and 190 billion French Pacific francs (US$2.1 billion) in credit, which is to say that we're loaning more money than we have on deposit. And so to make up the difference, we must refinance."

In February, French Polynesia President Oscar Temaru and a French Development Agency (AFD) official signed a protocol agreement allowing AFD to transfer 25 percent of its 50 percent stake in Socredo to BRED.

However, BRED's stake after Friday's agreement appears to be only 15 percent. Jean-Michel Laty, BRED's director general, was casual about the lower stake. "We'll see later. We are going to get to know each other. What is clear is that we are not against going further if our other partners, namely French Polynesia and AFD, agree."

AFD (Agence Française de Développement), a public institution that is part of the French system of Public Development Assistance (APD), had originally planned to turn over the rest of its stake in Socredo within five years.

For the time being, Socredo is continuing to prepare its bylaws and the new partnership with BRED's capital entry expected occur "in the weeks ahead."

Temaru's signing of the protocol agreement in February represented a change in attitude on the part of Tahiti's president. A few months earlier he was opposed to the idea of a private commercial bank becoming a stockholder in Socredo, a public development bank.

But the BRED official said Friday that commercial and development banks are not necessarily contradictory.

August 29, 2006

Tahitipresse: www.tahitipresse.pf

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