* Perol under judicial investigation over 2009 appointment
* Probe into potential conflicts of interest
* Natixis has recovered under Perol's leadership
(Adds comment from French banking and insurance regulator)
By Maya Nikolaeva and Gérard Bon
PARIS, Feb 7 The supervisory board of French
bank BPCE has backed CEO Francois Perol as he prepares to face
an investigation into whether his 2009 appointment represented a
conflict of interest because of his previous work as a
The board of France's second-biggest retail lender on Friday
pledged its unanimous support to the former aide to ex-French
President Nicolas Sarkozy, who faced questions from an
investigating magistrate on Thursday and was subsequently placed
under judicial investigation.
"The supervisory board took note of this information and
wanted to testify unanimously its confidence in Francois Perol,"
BPCE said in a short statement.
Perol's term as CEO is due to run until late 2016, but he
has faced repeated criticism from trade unions and others, who
have said his work for the government included advising on a
merger of major retail banks and that this makes him unsuitable
for the role.
French law prohibits public servants from being hired by
companies over which they have had direct authority for at least
A spokeswoman for the French banking federation declined to
comment on the investigation around Perol.
A spokeswoman for France's banking and insurance regulator
ACPR said the probe did not hamper the functioning of BPCE's
governing bodies and did not put into doubt Perol's integrity,
nor his ability to manage the bank.
Perol, Sarkozy's former economic adviser, was appointed in
2009 following a state-backed merger of regional banks Banque
Populaire and Caisse d'Epargne (BPCE) aimed at preventing their
investment banking business, Natixis, from collapsing
during the financial crisis.
However, trade unions pushed for an investigation into the
nomination because Perol had also previously worked at
investment company Rothschild & Cie, which played a key role in
the merger that placed BPCE group in second place behind Credit
Agricole in French retail banking.
A previous attempt to bring a case against Perol was thrown
out. Thursday's decision followed an appeal to a higher court.
In France, executives under investigation do not have to
step down from their posts and analysts said there may be some
relief among investors that the bank's board backed Perol.
"Perol is an intelligent person, he has done a good job at
Natixis and Caisse d'Epargnes and that is why he was
re-elected," a London-based analyst said, referring to the
renewal of Perol's mandate in late 2012.
Perol is not the only former high-ranking civil servant from
Sarkozy's 2007-2012 presidency to face scrutiny.
Orange CEO Stephane Richard kept his post whilst
being investigated over his role as a government aide in a 2008
arbitration case in which the state awarded a large pay-out to
businessman Bernard Tapie.
Under Perol's leadership, Natixis has slashed its balance
sheet, while restructuring efforts drove its shares up more than
100 percent in 2013.
BPCE revealed a plan late last year aimed at nearly doubling
annual net profit by 2017.
Natixis CEO Laurent Mignon said in a January interview with
Reuters that the investment bank had seen a turnaround under
Shares in Natixis closed up 0.07 percent, compared with a
0.42 percent increase in the European banking index.
(Additional reporting by Matthias Blamont; Editing by James
Regan and Mark Potter)