- A société de crédit foncier is a French credit institution authorized by the Autorité de contrôle prudentiel et de résolution to operate as a établissement de crédit spécialisé.
- The main purpose of the company is the financing or refinancing of loans and securities. See Article L. 513-2 and following of the Monetary and Financial Code.
- According to its by-laws and the licence: Authorization of the CECEI, Caisse Française de Financement Local must limit its activity to transactions with public sector entities or entities they fully guarantee.
- SCF issues covered bonds called obligations foncières which benefit from a legal privilege. See. Article L. 513-11.
By its by-laws and its licence: Authorization of the CECEI, Caisse Française de Financement Local may only hold the following items:
- exposures on public sector entities. See articles Article L. 513-4 and R. 513-2 of the Monetary and Financial Code;
- exposures on credit institutions benefiting from a minimum AA -rating (or a minimum A- rating when maturity does not exceed 100 days) considered as replacement assets, for a total amount limited to 15% of obligations foncières and other resources benefiting from the same privilege. See articles Article L. 513-7 and R. 513-6.
- Article L. 513-4 : Exposures on public sector entities
- Article L. 513-7 : Replacement Assets
- Article L. 513-8 : Coverage for liquidity requirements
- Article L. 513-9 : Report on asset quality
- Article L. 513-10 : Derivative instruments
- Article R. 513-2 : Evaluation of credit quality
- Article R. 513-4 : Equivalent guarantees
- Article R. 513-6 : Replacement assets
- Article R. 513-7 : Coverage of liquidity needs
Legal privilege and protection
- The assets held by a société de crédit foncier (SCF) are allocated by priority to the payment of any debt benefiting from the privilege. See article Article L. 513-11
- In the event of bankruptcy proceedings (redressement or liquidation judiciaire), any debt benefiting from the privilege, including derivative instruments, is paid at the contractual due date, in priority to all other debt, until fully reimbursed. See article Article L. 513-11 3rd
- Bankruptcy proceedings of a company which holds shares of an SCF cannot be extended to the SCF.
See article Article L. 513-20
- Article L. 513-11 Privileged debt
- Article L. 513-20 Liquidation proceedings of the parent company cannot be extended to the SCF
- Article L. 513-21 Termination of the management and recovery agreementsn
The over-collateralization ratio of sociétés de crédit foncier may be illustrated by the gap between the amortization curves of the assets and issues benefiting from the privilege. This ratio must be at least 105%. See articles L. 513-12 and R. 513-8
Caisse Française de Financement Local has committed to maintain this ratio at a level equal to or higher than 105%. This ratio is calculated on the basis of l’instruction 2014-I-16 and règlement CRBF 99-10.
Acquisition of receivables
- Acquisition of receivables allows for a secured transfer of receivables to a société de crédit foncier.
See article Article L. 513-13
- An agreement of public sector entities may be necessary for an acquisition of receivables. See article Article L. 513-14
Role of the servicer
- A regulated financial institution carries out all management functions for the société de credit foncier. See article Article L. 513-15
- The servicer is empowered to bring legal action before a court and on behalf of the SCF. See article Article L. 513-16
- Article L. 513-15 Servicing
- Article L. 513-16 Servicer, the legal representative of the SCF
- Article L. 513-17 Change of servicer
Sociétés de crédit foncier are monitored by different supervisors.
- Article L. 513-22 Role of the Autorité de Contrôle Prudentiel et de Résolution
- Article L. 513-23 Role of the specific controller
- Article L. 513-24 Role of the specific controller in the event of liquidation or receivership
- Article R. 513-15 Designation of the specific controller
- Article R. 513-16 Responsibilities of the specific controller
- Article R. 513-18 Register of loans
A Société de crédit foncier may acquire its own obligations foncières with the sole aim of pledging them to guarantee credit operations with the Banque de France in the event the SCF would be unable to cover its liquidity requirements by other means at its disposal. These obligations foncières may not represent more than 10% of the total outstanding resources benefiting from the privilege at the date of the acquisition. See article Article L. 513-26