Natexis Banques Populaires in €300 Million Direct Subordinated Debt Offering

January 25, 2005

Cleary Gottlieb represented Natexis Banques Populaires, the corporate financing arm of the Banque Populaire Group, in a €300 million Reg. S offering of deeply subordinated notes that will constitute Tier 1 capital for Natexis.  The joint lead managers on the offering were Deutsche Bank and Natexis Funding, and the notes have been listed on the Luxembourg Stock Exchange.  The transaction marks the first direct offering of deeply subordinated Tier 1 notes by a non-mutual banking group in France.   

Direct offerings were made possible by a new French law adopted in August 2003.  Before then, French banks issued Tier 1 securities through U.S. vehicles that issued trust preferred securities.  The Natexis transaction was the first direct offering conducted by an issuer with outstanding issuances of Tier 1 preferred securities already in the market, requiring coordination of the subordination clauses between the two structures.  Tier 1 transactions involve the issuance of securities with debt-like features, which are counted as core capital under regulations that require banks to maintain minimum capital levels as a percentage of their risk-adjusted assets.