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Mathieu Colas and Hélène Chaplain join Monitor Deloitte France

Both new partners have been at Deloitte for between six months to one and a half years, and after demonstrating their track record externally and internally, they have been promoted to senior partner and admitted into Monitor Deloitte’s ranks. Monitor Deloitte is the strategy consulting brand of Deloitte Consulting, established in 2012 after Deloitte acquired Monitor Group, a boutique US-headquartered strategic consultancy that was founded by among others strategy guru Michael Porter.

Hélène Chaplain is a senior partner in the firm’s Digital Strategy & Innovation practice, and is the leader of Deloitte’s wider Consumer Business industry segment, which spans services to clients in the automotive, consumer goods, retail, transportation and hospitality industries. She previously spent 17 years at Accenture, since 2001 in the role of partner. In her most recent roles, Chaplain served as Accenture France’s industry lead for consumer goods and was head of the firm’s digital consulting arm for clients in the products landscape.

Mathieu Colas is a senior partner in charge of Monitor Deloitte’s automotive and new mobility offerings. He started his career with Deloitte at Deloitte Digital – the Big Four firm’s rapidly growing digital wing – and previously spent four years at Capgemini Invent and over a decade at Oliver Wyman. Colas focuses on topics including (digital) strategy, large-scale transformation, emerging technologies, advanced analytics and digital transformation.

As part of their new roles, both Colas and Chaplain joined Monitor Deloitte’s annual offsite in June. During the three day trip to Biarritz in the south of France, the firm’s leadership walked through the year’s top accomplishments and the ambitions for the current financial year. Meanwhile, consultants were provided the room to network, share experiences and best practices and enjoy the region’s sunny weather and culinary culture.

Last year, Monitor Deloitte France added Olivier Perrin, a former Accenture Strategy partner, to its leadership ranks in Paris.

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Italy to cut deficit from 2020, provides relief to markets

Italy will cut its budget deficit targets from 2020 and reduce its debt over the next three years, Prime Minister Giuseppe Conte said on Wednesday, easing fears about fiscal policy in the euro zone’s third-biggest economy.

The ruling coalition last week stunned investors by tripling Italy’s previous deficit target for the 2019-21 period to pay for tax cuts, welfare for the poor and a planned revision of an unpopular pension reform.

Speaking to reporters after a meeting of ministers, Conte said the government would push ahead with its expansionist fiscal programme but would keep its spending in check.

“We will show courage above all in 2019, because we believe that our country needs a budget that calls for strong growth,” said Conte, flanked by deputy prime ministers Luigi Di Maio and Matteo Salvini, and Economy Minister Giovanni Tria.

Conte confirmed a deficit target of 2.4 percent of gross domestic product (GDP) in 2019 and said this would fall to 2.1 percent in 2020 and 1.8 percent in 2021.

He predicted the debt/GDP ratio would fall beneath 130 percent next year and hit 126.5 percent by 2021. It is currently around 131 percent, the second highest in Europe after Greece.

The government did not release growth targets, but Tria said the gap between Italian growth and the rest of the eurozone would halve next year. The IMF has forecast growth of 1.0 percent in Italy in 2019 against 1.9 percent for the eurozone.

News the coalition planned to cut the deficit faster than previously indicated caused Italian government bond yields to fall sharply on Wednesday, while the Milan bourse outperformed other major stock exchanges in Europe to close up 0.9 percent.

Investments

The coalition came to power in June promising to slash taxes and boost welfare spending, and says an expansionary budget is needed to lift Italy’s underperforming economy, which is some six percent smaller than it was a decade ago before the sovereign debt-crisis exploded.

Tria said the 2019 budget would include a lift in public investment and would offer tax breaks to firms investing in equipment and staff. The jobless rate would fall from around 10 percent now to as low as 7 percent, the prime minister said.

European Commission officials and EU allies had expressed their concern over Rome’s spending plans and there was some relief over the reduced targets.

“It’s a good signal that the trajectory has been revised because it shows the Italian authorities are hearing the concerns and remarks from their partners and the European Commission,” EU Commissioner Pierre Moscovici said in Paris.

Italy’s minister for European affairs, Paolo Savona, went to Strasbourg on Wednesday to try to reassure EU lawmakers that Rome was not being irresponsible.

“I think there is no chance that Italy will default on its public debt,” said Savona, who has previously called into question Italy’s membership of the euro currency.

“I do not intend to take any action against the euro. On the contrary, I want to strengthen it,” he said on Wednesday.

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Characterization of bonds (obligations) and capital markets

On 23 November 2017, the French Cour de Cassation (second civil room of the French Supreme Court dedicated to private cases) ruled, by a literal and traditional construction of Article L. 213-5 of the French monetary and financial Code, that the characterization of bond (obligation) is not conditioned on the guarantee of repayment at par. Bonds that are not capital guaranteed remain nevertheless bonds.

In the previous instance, on 21 June 2016, the French Court of appeal of Paris ruled, on the contrary, that repayment at par was included as an essential feature in the concept of bond (obligation). This position was held to protect consumers, in a context where they have subscribed for life insurance based on non-capital guaranteed products, and they have not get back, at least, what they have invested.

It has to be mentioned that insurance companies are sometimes sellers in the secondary market of bonds (obligations i.e. titres financiers), that the market calls structured products. This implies that the performance of the bond is linked to an underlying which can be volatile and sometimes the capital invested is not guaranteed. In a way, non-capital guaranteed structured obligations can economically be similar to derivatives (contrats financiers) and this may result in massive losses. In such circumstances, the insurance company has to ensure, when such bonds / structured products are sold to consumers repackaged as life insurance, that the advisory and the information obligations are fully complied with.

When we are in presence of bonds that are not capital guaranteed, the characterization of bond is then not only crucial for insurance companies but also for issuers, subscribers, and holders for other regulatory purposes.

The current position of the French Cour de Cassation will reassure the bond market as a whole.

Up to date 23 November 2017