The Banque de l'Indochine (), originally Banque de l'Indo-Chine ("Bank of Indochina"), was a bank created in 1875 in Paris to finance French colonial development in Asia. As a bank of issue in Indochina until 1952 (and in French Pacific territories until 1967), with many features of a central bank, it played a major role in the financial history of French Indochina, French India, New Caledonia, French Polynesia, and Djibouti, as well as French-backed ventures in China and Siam. After World War II, it lost its issuance privilege but reinvented itself as an investment bank in France, and developed new ventures in other countries, such as Saudi Arabia and South Africa.

The Compagnie Financière de Suez acquired a controlling interest in the Banque de l'Indochine in 1972, then merged it in 1975 with its own banking subsidiary to form Banque Indosuez, since 1996 itself part of the Crédit Agricole universal banking group.

History

Background and creation

Following the early phases of the French conquest of Vietnam, the Comptoir d'escompte de Paris (CEP) in 1864 opened offices in French Cochinchina, and also developed a presence in Pondicherry, Calcutta, Bombay, Shanghai, Hong Kong, and Yokohama. Meanwhile, the rival Crédit Industriel et Commercial (CIC) had become the Paris correspondent of the Hong Kong and Shanghai Bank, and had powerful political backers in the conservative Catholic administration under France's President Patrice de MacMahon. In the early 1870s, both banks developed competing projects to create an institution that would receive the privilege of issuing money in French Indochina.

In October 1874, the CEP, together with its allies, the Hentsch-Lütscher, Hoskier, and Paccard & Mirabaud merchant banks and the newly created Banque de Paris et des Pays-Bas (BPPB), reached an agreement with the CIC to create the Banque de l'Indochine as a joint venture. On the face of it, CEP and CIC, with their respective allies (including for the CIC the Société Marseillaise de Crédit and the ), controlled equal blocks of shares in the new institution, but CEP was the dominant partner. , the CEP's Chairman and board member of the BPPB, was the new venture's founding chairman, and its founding (general manager) was the CEP's Pierre Girod. The Banque de l'Indochine was formally established by presidential decree on , with privilege to issue banknotes (initially in French franc and from 1885 in French Indochinese piastre) backed by its bullion reserves. At its creation, it took ownership of the CEP's former branches in Saigon and Pondicherry. The bank outsourced the production of coins to the Monnaie de Paris and of notes to the Bank of France.

Colonial bank of issue

The first banknotes, printed in Paris by the Bank of France for the Banque de l'Indochine, arrived in Saigon on , nearly a year after the bank's creation. They were quickly adopted by ethnic-Chinese traders in and around Saigon, who were familiar with banknotes from experience in Hong Kong or Singapore. Even so, the bank's first years of activity were marked by occasional bouts of monetary instability.

Following the Treaty of Tientsin (1885) that concluded the Sino-French War, France consolidated its colonial rule northwards over Annam and Tonkin. Competitors of the CEP, and especially the Société Générale, feared the Banque de l'Indochine would monopolize credit and banking activity in the expanded territory. The French government, whose moderate Republican orientation was supported by the CEP against the more conservative Société Générale, leveraged that situation to encourage the Banque de l'Indochine to increase its credit provision and provide more support to Indochina's economy. A compromise was found in 1887 under which the Société Générale would join the Banque de l'Indochine as a minority shareholder, through a capital increase that was closed on and resulted in a 15.5 percent stake for Société Générale. Meanwhile, the bank's issuance privilege was extended to Annam and Tonkin in February 1888, as well as to New Caledonia. Following that restructuring, the CEP controlled four of the board's eleven seats, CIC three, and Société Générale and the BPPB one each. The CEP's influence was eclipsed following its collapse in 1889, but it came back as the Comptoir national d'escompte de Paris (CNEP) with one board member in 1890 and retook the Banque de l'Indochine's chairmanship in 1892. From that date, the Banque de l'Indochine effectively became a joint vehicle ("") for the Paris banking community's activities in the Indo-Pacific. That evolution was completed in 1896 as the Crédit Lyonnais, which had expanded into Egypt and India, entered the Bank de l'Indochine's capital and board. The Banque de l'Indochine increasingly behaved as an autonomous actor, shedding its former identity as "daughter of the CEP". The fact that French banks acted together in a single venture, as opposed to competing with each other for banking business in Indochina, may be attributed to the need to face regional rivalry from the powerful British banks such as the Hong Kong and Shanghai Bank, and also by the intrinsic advantage that the bank of issue privilege conferred to its holder against any upstart.

The bank opened branches () in Haiphong in Tonkin on and, at the French government's request formalized in a decree of , in Nouméa, New Caledonia on , and in Papeete, French Polynesia on . It opened offices () in Hanoi on , Phnom Penh on , Tourane in Annam (now Da Nang) in August 1891, Hong Kong on (taking over the former office of the CNEP), Bangkok in February 1897, Shanghai in July 1898, Canton and Hankou (now part of Wuhan) on , Battambang (then in Siam) in August 1902, Singapore on , Tianjin on , Beijing in July 1907, and Yunnan-Fu (now Kunming) in 1910.

On , for the first time, the Banque de l'Indochine printed its own piastre banknotes at a new facility in Saigon. In 1898, it issued the first banknotes denominated in French Indian rupees.

In 1900, the bank's Shanghai office participated in the financing of the French contribution to the international expeditionary corps that suppressed the Boxer Rebellion, and subsequently represented the interests of the French government in handling the Boxer indemnity. The Banque de l'Indochine invested in a number of colonial ventures such as the and the Chemins de fer de l'Indochine et du Yunnan, for which the French government asked it to open an office in Mongtze (now Mengzi) in 1914. It repeatedly entered new territories at the request of the French government. In July 1908, it thus established an office in Djibouti to co-finance the Compagnie du Chemin de fer de Djibouti à Addis-Abeba, the first-ever bank in the city. In 1918, it opened an office in Vladivostok to serve the Allied military base there during the Siberian intervention.

In July 1921, the Banque Industrielle de Chine (BIDC), which had been created in 1913 to compete with the Banque de l'Indochine for the financing of French ventures in Shanghai and elsewhere in China, collapsed despite the backing it had received from the French Foreign Ministry and the BPPB. The latter acquired the BIDC's sounder assets, and the rest was managed by the Banque de l'Indochine as a bad bank, the , and eventually restructured in 1925 as the Franco-Chinese Bank (BFC). The Banque de l'Indochine remained a significant stakeholder of the BFC, together with the BPPB and the .

In the 1920s the Banque de l'Indochine participated in more colonial ventures, such as the Crédit Foncier de l'Indochine, the Compagnie Francaise de Tramways et d'Eclairage Electrique de Shanghai, and the Société Le Nickel in New Caledonia. It opened an office in Fort-Bayard (now Zhanjiang) in the French Leased Territory of Guangzhouwan on , and offices in Cần Thơ and Nam Định in 1926. In 1930, in coordination with the French government, the Banque de l'Indochine took the French Indochinese piastre off the silver standard (which it had upheld until then, alone with China which in turn abandoned it in 1935) and into the gold standard. In 1936, the piastre was taken off the gold standard, together with the French franc to which it was kept convertible at a rate of 10 francs for 1 piastre.

Throughout the 1920s, the French Parliament extended the Banque de l'Indochine's issuance privilege only for short periods of time, from 1920 to 1925 on an annual basis, and then every semester, in contrast to earlier long-term extensions. The Banque de Paris et des Pays-Bas, which by then had become the Banque de l'Indochine's major competitor, provided covert funding to advocacy efforts against further extension. On , new French legislation eventually extended the bank's issuance privilege by 25 years, against which the French state participated in a capital increase and subsequently held 20 percent of the bank's equity capital as well as extensive rights in its governance. These included six board memberships and the selection of the board chair. The French government initially kept René Jules Thion de la Chaume, a traditional banker, as chairman of the Banque de l'Indochine, but in 1936 replaced him with a lifetime civil servant, Marcel Borduge.

Also in 1931, the Banque de l'Indochine participated in the establishment of the Bank for International Settlements in Basel, and in a capital increase of the State Bank of Morocco, despite the latter being under the BPPB's dominant influence.

World War II

During World War II, the Banque de l'Indochine was chaired by Paul Baudoin, who in the summer of 1940 was the first Foreign Minister of Vichy France. In 1941, the Banque de l'Indochine was allowed to acquire an equity stake in its rival the Banque de Paris et des Pays-Bas. The chief executive, , in contrast to Baudoin, was involved in the French Resistance. Largely thanks to him, the bank avoided participation in the worst aspects of collaboration while providing some support to the Resistance. In August 1944, its Paris headquarters was the venue for the negotiation between Swedish diplomat Raoul Nordling and German commander Dietrich von Choltitz to limit bloodshed during the Liberation of Paris. The Banque de l'Indochine, like the BPPB, was subsequently able to escape nationalization following the liberation of France, even though Baudoin was sentenced to Indignité nationale.

In 1940 the bank established offices in London and Yokohama, and in November 1942 relocated the latter to Tokyo until it closed in September 1945. Under Japanese occupation, the bank's offices in Hong Kong and Singapore ceased activity in early 1942, and those in China were reduced to near-complete paralysis. In Pondicherry, the news of the armistice of 22 June 1940 were met with panic and triggered a bank run on the Banque de l'Indochine. This in turn played a role in the decision by Louis Bonvin, Governor of French India, to reverse his prior allegiance to Vichy France and rally to Free France, which allowed the bank to receive financial support from the British Raj.

Postwar history