France’s perfumed assassin

Bankers, beware


Apart from being told the forensic accounting team has just uncovered a major fraud in the securities-trading floor, probably the last thing the boss of a French bank wants is an invitation to a meeting with finance minister Christine Lagarde.

At the last meeting, for example, the titans of banking were ordered to step up their lending to businesses, or else. That was in February. The institutions had failed to meet their credit commitments agreed in exchange for government support last year. Around the same time, the nation’s top bankers were told their own bonuses would be taxed along the same lines as their traders.

According to insiders, Mme Lagarde conducts these get-togethers in an atmosphere of steely cordiality. Not inclined to prevarication, the finance minister regards herself as the headmistress of a sometimes wayward fraternity of bankers who must be regularly disciplined.

Married to a businessman, the 54 year-old mother of two teenage boys has shown herself to be a woman of action in her two and a half years in the job. Indeed she once castigated the nation’s elite for thinking too much and doing too little – an observation that went down badly with the ‘intellos’, the self-styled intellectual elite.

Named last year by the Financial Times as Europe’s top finance minister, Lagarde has waded fearlessly into one issue after another. She thinks big and she’s in a hurry. In early 2009 she warned it was vital to agree on a much-improved regulatory structure ‘as soon as possible’. In mid-2009, firing a warning shot across the bows of French banks, she declared hefty bonuses paid by Citibank, Nomura among others to be ‘an absolute disgrace’.

And right now, in the row over Greece’s public accounts, she’s believed to be the finance minister who wants tough measures against Athens as well as an investigation by Eurostat, the EU’s statistics office, to establish whether Greece employed special instruments to hide its breach of eurozone debt rules. US treasury secretary Tim Geithner regularly calls her from Washington to check on the eurozone’s state of play. (Five years a resident of Chicago, Lagarde speaks excellent English.)

The finance minister is a stickler for transparency. She wants the new European Securities and Marketing Authority to take a long hard look at the dark-pool trading exchanges such as Turquoise that have sprung up to do sub rosa block deals. For the same reasons, she’s just agreed hefty fines on certain French steel-producers for running a price-fixing cartel. And her ministry has just released its own black list of what France calls ‘tax paradises’ with a view to slapping heavier imposts on domestic companies with operations in them.

In her spare time she’s drawn up plans to revolutionise corporate bond-trading in Europe through its very own exchange. No small project this, because it would put corporate bonds up in lights instead of being traded privately between banks, a practice she believes is hostile to pan-European economic stability.

As long as people stay on the right side of her, Lagarde does all this with considerable charm and elegance. She handles a hefty work load with the same discipline that once got her into France’s synchronised swim team, a sport that requires endless practice and absolute precision.

Clearly, one of her skills is an ability to cut to the chase. Perhaps this comes from her training as a lawyer – she has no formal economic, financial or banking qualifications – and from her stellar stint as first female chairman of international law firm Baker & McKenzie where she lifted earnings by 30 percent (unlike many French politicians, she’s actually worked abroad).

She’s also France’s first female finance minister and she just may be the best in a long time.