MARY FAGAN and MARY DEJEVSKY The French government has abandoned the privatisation of France

MARY FAGAN

and MARY DEJEVSKY
The French government has abandoned the privatisation of France Telecom, the monopoly telephone network operator, in an apparent attempt to appease trade unions and employees.Alain Juppe, the Prime Minister, ended months of speculation by saying that the company’s statute would be changed to meet the challenge of competition when the European telecommunications market is opened up on 1 January 1998, but that it would remain in state control.Mr Juppe said that the state would retain a majority stake in France Telecom with employees preserving their status as public employees and the benefits of secure employment and pensions.However, the government angered one of the main trade unions, Force Ouvriere, by accepting the principle of an independent regulatory authority outside both France Telecom and the government.The independence and strength of the regulator has been of great concern to BT and other operators who wish to compete in French public telephony. There is a lot of slack to be taken up first.”Denis Chapman in Scarborough, described the market as “still very patchy with only the realistically-priced properties finding purchasers.”John Pocock of Pocock and Shaw in Cambridge was more optimistic: “Houses generally are proving to be much more readily saleable and the situation appears to be better than any time in the past 12 months.”. More than four fifths of the estate agents said selling prices were the same as three months ago. The survey commented that recovery was in danger of being held back by sellers who had been encouraged by positive reports and decided to hold out for a better price.David Baker, an estate agent in Penarth, near Cardiff, said: “There is definitely more activity but let us not get carried away with the thought that prices will rise. Its regular survey of members for the three months to February found 62.6 per cent reporting an increase in business of up to 10 per cent, while nearly one in eight said activity had grown by 25-50 per cent. Only 5 per cent reported a decrease compared with three months earlier.
Prices were flat, however.

Buyers have been encouraged by interest rate cuts and excellent mortgage deals, according to the Royal Institution of Chartered Surveyors. The new year recovery in the housing market continued last month, with nearly three quarters of estate agents reporting higher activity, writes Diane Coyle. The cut in bad debt provisions accounted for much of the 15 per cent increase in group pre-tax operating profits to pounds 327m.”Overall, the results are below expectations. Even though the improvement in bad debts is extremely good, it means on an operating level the profit growth has been small,” said Rob Thomas, analyst at UBS.Unlike most building societies, 40 per cent of Alliance profits are from non-traditional activities This is one reason why it is anxious to gain bank status.. The personal banking sector fared the best, with a 57 per cent increase in pre-tax profits to pounds 63m.

But Girobank’s corporate money transfer business saw profits inch up to pounds 66m from pounds 63m in 1994.Easing the pain of the estate agency write-off to some extent was an unexpectedly sharp drop in the bad debt provision to just pounds 3m, from pounds 29m in 1994. “These are the lowest bad debts we have had for a long time, thanks to recoveries of commercial loans previously written off,” said Richard Pym, group finance director. But we do not launch anything that does not make a profit,” he said.Girobank, which is the country’s biggest telephone banking operation, was also operating under “very tough conditions”, he said. The mortgage market became increasingly competitive in 1995, with a wider range of discounts, fixed rates and special offers than ever before.A&L achieved its highest-ever market share of total UK net mortgage advances at 8.2 per cent, as against its “normal” share by market weighting of 5 per cent. But Mr White conceded that earnings on this increased share were slim “The margins are very tight on new business.

We just had to take a tough decision,” he said.The decision to get out of estate agency is part of the process of cleaning up the balance sheet for A&L’s planned flotation on the stock market next spring. The goodwill in the chain, concentrated in East Anglia and the east Midlands, is pounds 25m, with a further pounds 15m coming from redundancy and closure costs.The write-off held pre-tax profits last year virtually flat at pounds 287m, as A&L faced very tough conditions in two of its core business markets: home loans and Girobank, the group’s corporate banking side. JOHN EISENHAMMER

Financial Editor
The Alliance & Leicester building society said yesterday it was pulling out of the estate agency business, and announced a pounds 40m write-off that took the wind out of profits. Peter White, chief executive, said he hoped to have sold or closed the 70 agencies by late summer.”There was no way we were going to make money out of it. “This is merely a suggestion to get some order into the merger process.”Mrs Knight also suggested that, if a society becomes the target of a rush of account opening on speculation that it will convert, it might be able to suspend the shareholding status of new accounts for a short period.Mrs Knight said she would “push hard” to get the draft Bill into the Queen’s Speech at the start of the next session of Parliament in the autumn.The Labour Party yesterday said the Government must act urgently to put the reforms into law before the general election.Comment, page 17. “It would be a one-year ring fence from when the merger is announced, to give a quiet period for the societies’ consultation of their members to take place,” she said.