According to the Court of Auditors, it is the turn of the banking profession to take stock of the loans guaranteed by the State (PGE), which have not been marketed since June 30th. Until that date, “Almost all companies that subscribed to a PGE have started to reimburse it”states the French Banking Federation (FBF) without noticeable difficulties. According to estimates by the FBF, even a quarter of the outstanding PGE has been repaid, as shown by aggregated indicators of the six most important banks.
At the end of 2021, out of 647,000 PGEs – 95% of the total – 11% were reimbursed in the first year, while 72% chose to be reimbursed over 4 to 5 years, including 57% who chose the option of being reimbursed for a another year to postpone year. Around 883,000 PGE requests totaling EUR 145.5 billion were submitted by the six major banks. The rejection rate remained stable at 2.9%.
Very low failures
Failures remain the exception for the time being. In the second quarter, a little more than 300 files were checked by the credit agency, which is very little. The company’s cash flow remains satisfactory, the default rate is extremely low and according to Bpifrance’s business survey (July 2022), more than half of VSEs/SMEs have fully or mostly used up their PGE and only 6% fear repayment difficulties.
According to the Banque de France, the default rate for PGEs could hardly reach 3.1%, much lower than the 7% estimated when the system was launched in March 2020, ie a gross loss of 4.6 billion euros. A fairly positive estimate, confirmed by the Court of Auditors, which, in a report published on July 25, judged that the device ” made it possible to support the supply of credit to the banks and to avoid massive corporate insolvencies in an unprecedented context of crisis “.
cost of 3 billion euros
In fact, the report notes, of the €137 billion granted by banks at the end of December 2021, more than 70% had been granted by June 2020. Small companies have largely benefited from the system: they make up almost 90% of the number of companies from PGEs and 36.7% of the bonds outstanding. Risk sharing is also well balanced, according to the advisers, and the ultimate cost of the PGE to the state – which guarantees between 70% and 90% of the loan – should not exceed €3 billion. It is little when such support of the economic fabric is disrupted.
The fact remains that the economic environment has deteriorated sharply since Russia invaded Ukraine, even if corporate results are still being driven by the dynamic recovery of 2021. But concerns are now centered on 2023, a full-year repayment of PGEs as the scenario of a eurozone recession begins to take on some consistency, particularly in Germany. “Default rate estimate is likely to be revised upwards, but we will remain on non-dramatic levels”recognized credit broker Frédéric Visnovsky in an interview with AFP on July 25.