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Summary of our market study
Regulations have evolved, with new mortgage reforms capping loan terms at 25 years and affordability ratios at 35%, and the incorporation of surety bond laws into the civil code to enhance consumer protection.
The global market for financial guarantees is estimated at 17.3 billion euros.
The surety market in France is growing steadily. The market for personal loans is booming. Over 95% of surety company commitments concern performance bonds for individuals. In the personal loan sector, sums guaranteed by surety companies climbed to 765 billion euros in 2020.
Outstanding mortgage loans to individuals will total 1,137 billion euros in 2020. The rate at which individuals use surety bonds for mortgage loans is rising steadily, reaching around 63.4% in 2020, compared with 54.3% six years earlier.
The size of the surety market has been estimated at around 1.6 billion euros in 2020.
The main market players are Crédit Agricole with 34.7% of outstanding mortgages, Groupe BPCE with 27.5% and Confédération Nationale du Crédit Mutuel with 15.7%.
Key players in the French surety market
- Banque Publique d'Investissement (BPI) is a major player in the French surety market, widely recognized for the financial support it provides to companies.
- Euler Hermes, the world leader in credit insurance, extends its expertise to the surety market, offering companies the protection and confidence they need to meet their financial obligations and commercial transactions.
- Crédit Logement is a key player for individuals wishing to obtain a home loan. Its offer includes a series of guarantees designed to reassure lenders about the borrower's ability to repay.
- Casden Banque Populaire focuses primarily on the education sector and civil servants, offering tailor-made financial products, including surety bonds. Its in-depth knowledge of the needs of the public sector gives it a strategic advantage.
- Insurance companies such as CEGC (Compagnie Européenne de Garanties et Cautions) and CAMCA (Caisse d'Assurances Mutuelles du Crédit Agricole) are also market players.
- Galian provides insurance and financial guarantees to real estate professionals.
- The mutual Socama (Sociétés de Caution Mutuelle Artisanale) and Siagi (Société Interprofessionnelle Artisanale de Garantie d'Investissements) specialize in small businesses in the craft and trade sectors.
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Summary and extracts
1 Market overview
1.1 Definition and scope of study
A surety bond is a contract by which a natural or legal person undertakes to pay the debt of another person when the latter is unable to do so another person's debt when the latter is unable to do so. The person who assumes responsibility for collecting the debt is called the guarantor. In France, surety bonds are governed by the Civil Code. There are several types of surety, such as simple surety and joint surety, both of which are included in this study.
The French surety market can be segmented into 4 key activities: surety for housing loans, for business and professional loans, for the financial sector and finally for the administrative sector. In 2020, the first activity accounted for 94.8% of total company sales, the second for 2.3%, the third for 2.1% and the last for 0.3%. The surety market has been growing since 2011. This growth is underlined by the rise in outstanding mortgages, which over the period 2011-2020 grew at a compound annual growth rate of 4.6%.
In France, surety bonding is mainly aimed at private individuals. In fact, over 95% of surety company commitments are performance bonds on loans to individuals.
The main players in the surety market are banking groups and insurance and mutual groups, such as SOCAMA.
The current environment in France makes the surety market a fast-growing sector.
1.2 A surety market in France that grows every year ...
Guarantee companies, particularly for personal loans, are paid a commission of between €*** and €***, depending on the value of the sum guaranteed. In other words, the higher the sum, the higher the commission. Then, as soon as the borrower receives the loan, he or she must pay the surety company *.*% of the ...
1.3 ... which, despite the global pandemic, is still going strong
despite the global pandemic, sums guaranteed by surety companies (***) continued to grow. In fact, sums guaranteed in mortgages for individuals rose by *.*% compared with ****, effectively taking their total to *** billion euros. Financial guarantees also rose by **.*% to a total of **.* billion euros.
By contrast, the sums committed for guarantees to businesses ...
2 Demand analysis
2.1 Credit guarantee applications for individuals
An "outstanding amount" is the sum that the debtor still has to pay when he takes out a loan, for example if person A takes out a loan of **,*** euros at a rate of *% in ****. He repaid **,*** between **** and ****, in the space of * years. Person A's outstanding balance is therefore **,*** euros ...
2.2 The sums involved in guaranteeing companies and professionals
Outstanding cash and investment loans to non-financial companies France, **** - *****, € billion Source: ****
in the chart below, ***** is marked with a star, as we do not yet have data up to December **, ****, but we do have data up to October **, ****. Thus, the data shown are representative up to October ****.
Overall, both investment ...
2.3 Demand for surety bonds from the financial sector
Between **** and ****, the sums committed by surety companies to the sector declined, falling by *.* billion euros, or **.*%. Over the ****-**** period, the sums committed have risen again, reaching **.* billion euros in ****. The biggest increase was seen in ****, with committed sums growing by **.*%, according to the ASF (***) report.
Amounts committed by surety ...
3 Market structure
3.1 An overview of the players in the surety market
The status of surety companies
Mutual guarantee companies, such as SIAGI, are companies generally set up by trade unions or private individuals to help companies wishing to enter the sector. They also guarantee companies with fewer than ** employees and sales of less than ten million euros, to help them grow. This ...
3.2 Breakdown of surety companies
Geographical distribution of surety companies
Geographical distribution of surety companiesFrance, ****, in number of companies
Source: ****
To produce this map, we used NAF code **.**Z -"Other credit distribution"-. This NAF code is not only specific to surety companies, it also includes financial services activities consisting mainly in the granting of ...
3.3 Structure of the bonding market
Market shares of the various groups in terms of outstanding home loans at June **, **** France, ****, as % of total Source: ****
In the home loan guarantee segment, Crédit Agricole was in the lead in **** with **.*%, followed by Groupe BPCE (***) with **.*%. Confédération Nationale du Crédit Mutuel came third with **.*%.
market ...
4 Offer analysis
4.1 Different types of surety
There are several types of surety offered by credit institutions:
the landlord or financial institution first turns to the principal debtor (***) to try to recover the sums owed. Only if the principal is insolvent, and legal proceedings against him or her are unsuccessful, will the guarantor be involved. in the case ...
4.2 Prices for surety companies
Prices of surety companies for home loans
A bank guarantee requires the payment of a commission of between *** and *** euros, as well as a contribution to a Mutual Guarantee Fund (***) of around *.*% of the loan amount.[***]
Source: ****
For mutual guarantee companies
Generally speaking, the cost of a guarantee file with a ...
4.3 Alternatives to bank guarantees
There are several other alternatives to bank guarantees:
Conventional hypothec: the principle consists in voluntarily pledging the property that the lender has to pay to the bank that agreed to make the loan. As soon as the lender can no longer pay the fees required to repay the loan, the bank ...
5 Regulations
5.1 Bonding regulations
A new set of laws for surety bond standards
Prior to the new ordinance introduced in ****, laws concerning surety bonds were scattered throughout the Consumer Code and the Monetary and Financial Code. In ****, they will return to the Civil Code. This means that consumers will be better protected, since the new ...
6 Positioning the players
6.1 Player segmentation
- Allianz Trade (ex Euler Hermes)
- SOCAMA
- BPI France
- CAMCA
- Galian
- Casden Banque Populaire
- CEGC (Compagnie Européenne des Garanties et des Caution)s
- Siagi
- Crédit Logement
List of charts presented in this market study
- Guaranteed sums for personal loans
- Bonding rates for mortgages
- Healthy outstanding real estate loans for individuals
- Guarantees provided by surety companies for businesses and professionals
- Outstanding cash and investment loans to non-financial companies
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