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

IMF Staff Country Reports, August 29, 2025

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Most systemically important French banks also head conglomerates; therefore, financial conglomerates' soundness is crucial for France's financial stability.
Conglomerate structures integrate banking, insurance, and other services, providing diversification benefits and enhanced business opportunities while introducing complexity and increased financial risks that may not be fully captured under sectoral regimes.
The conglomerates covered are mostly regulated under European Union (EU) rules and Single Supervisory Mechanism (SSM) standards; these rulebooks determine how financial stability risks from conglomerates’ operations can be managed and mitigated in France.

Financial conglomerate structures can introduce risks not necessarily fully captured by applicable sectoral regimes.
Robust capital adequacy, governance, and risk management regulations are crucial to accurately assess risks and ensure sufficient capital to cover potential losses.
Effective supervision, supported by strong legal powers to implement and enforce measures, is critical to mitigate potential impacts on France's financial stability and protect stakeholders’ interests.
Supervision of financial conglomerates is supplemental in nature and should be considered as complementing:
- 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.

Primary regulatory frameworks for the conglomerates discussed are EU rules and SSM standards.
The effectiveness of managing financial stability risks depends on the extent to which these rulebooks permit timely and effective management and mitigation of conglomerate-related risks in France.
Key regulatory focus areas identified:
- capital adequacy requirements,
- governance,
- risk management,
- supervisory legal powers to implement and enforce measures.

Maintain and strengthen robust capital adequacy regulations to ensure conglomerates hold sufficient capital to cover potential losses.
Enhance governance standards and risk management frameworks across conglomerates to address complexity and cross-sectoral risks.
Ensure supervisors possess strong legal powers to implement and enforce corrective measures in a timely manner.
Treat conglomerate supervision as complementary to sectoral assessments (BCBS Core Principles and IAIS Insurance Core Principles) rather than a substitute.

The technical note’s developments on financial conglomerates are supplemental and intended to complement:
- the Euro Area FASP assessment against the BCBS Core Principles for effective banking supervision, and
- the IAIS Insurance Core Principles detailed assessment in France.
Emphasis is placed on the interplay between sectoral regulation (banking and insurance) and conglomerate-level risks and supervision.