Credit Agri­cole posts $3.6bn loss af­ter Greek sale

France’s third largest bank is sell­ing Athens-based Em­po­riki for a to­ken price of 1 euro

The Pak Banker - - Front Page -

PARIS

Credit Agri­cole, France’s third largest bank, posted a quar­terly loss that ex­ceeded an­a­lysts’ es­ti­mates on costs tied to the sale of its Greek unit. The shares dropped the most in six weeks af­ter the bank, based out­side of Paris, said Fri­day it had a third-quar­ter net loss of 2.85 bil­lion eu­ros ($3.64 bil­lion).

That’s wider than the 1.88 bil­lion-euro av­er­age es­ti­mate of seven an­a­lysts sur­vey. Credit Agri­cole is sell­ing Athens-based Em­po­riki for a to­ken price of 1 euro, it said Oct. 17. The French bank will in­ject more funds into Em­po­riki, bring­ing the to­tal cap­i­tal boost since July to 2.85 bil­lion eu­ros, and buy 150 mil­lion eu­ros of con­vert­ible bonds is­sued by Al­pha Bank. Credit Agri­cole, led by Chief Ex­ec­u­tive Of­fi­cer Jean-Paul Chif­flet, agreed last month to sell its Em­po­riki Bank unit to Greece’s Al­pha Bank un­der terms cut­ting the French lender’s net in­come by 1.96 bil­lion eu­ros. The com­pany is end­ing a six-year in­vest­ment in Europe’s most in­debted coun­try as con­cerns linger Greece might exit the euro area.

“This re­flects the past and es­pe­cially their troubles in Greece,” Ro­main Bur­nand, who helps man­age 900 mil­lion eu­ros at Moneta As­set Man­age­ment in Paris, said be­fore the earn­ings re­lease. “Now you need to look at their re­tail bank’s ca­pac­ity to re­sist a more dif­fi­cult eco­nomic sit­u­a­tion in France.”

Credit Agri­cole fell 6.3 per­cent to 5.55 eu­ros by 10:39 a.m. in Paris, the most since Sept. 26 and giv­ing the firm a mar­ket value of about 14 bil­lion eu­ros. The shares have risen 27 per­cent in 2012. BNP Paribas SA, France’s largest bank, has gained 32 per­cent this year, while So­ci­ete Gen­erale, the coun­try’s No. 2 lender, has added 47 per­cent.

Leav­ing aside the costs re­lated to the Em­po­riki sale and ad­di­tional non-re­cur­ring charges, Credit Agri­cole had a profit of 716 mil­lion eu­ros in the quar­ter, the com­pany said. Profit from the French re­gional banks fell 3.5 per­cent, while earn­ings at the LCL branch net­work de­clined 11 per­cent. The bank also booked an ac­count­ing charge of 647 mil­lion eu­ros tied to the the­o­ret­i­cal cost of buy­ing back its own debt as mar­ket prices fluc­tu­ate. Credit Agri­cole recorded a 572 mil­lioneuro write­down mostly on its Ital­ian con­sumer-credit busi­ness, a 181 mil­lion-euro loss linked to its sale of CA Cheuvreux, and a 193 mil­lioneuro ac­count­ing charge on its stake in Spain’s Bank­in­ter SA. (BKT)

Credit Agri­cole is sell­ing Athens-based Em­po­riki for a to­ken price of 1 euro, it said Oct. 17. The French bank will in­ject more funds into Em­po­riki, bring­ing the to­tal cap­i­tal boost since July to 2.85 bil­lion eu­ros, and buy 150 mil­lion eu­ros of con­vert­ible bonds is­sued by Al­pha Bank. Credit Agri­cole and Athens-based Al­pha aim to com­plete the trans­ac­tion by the end of this year.

Credit Agri­cole is also shut­ting its riski­est in­vest­ment- bank­ing busi­nesses. The bank has stopped most of its eq­uity de­riv­a­tives and it has no pro­pri­etary trad­ing ac­tiv­ity, ac­cord­ing to a Sept. 26 pre­sen­ta­tion. The lender is sell­ing its bro­ker­age CLSA to China’s Citic Se­cu­ri­ties Co. in a trans­ac­tion val­ued at $1.25 bil­lion.

Credit Agri­cole started trim­ming its bal­ance sheet last year and in De­cem­ber scrapped its 2014 earn­ings tar­gets. Credit Agri­cole Group, the en­tity reg­u­la­tors and rat­ing firms look at for com­pli­ance with in­ter­na­tional rules, ex­pects to reach a core cap­i­tal ra­tio of more than 10 per­cent by the end of 2013 un­der Basel III rules, the bank re­it­er­ated to­day.

Credit Agri­cole has no plans for a cap­i­tal in­crease, CEO Chif­flet told jour­nal­ists on a call to­day. While Credit Agri­cole’s fund­ing to Em­po­riki made it the for­eign lender with the most to lose should Greece exit the euro, the planned sale of the unit to Al­pha will cre­ate the south­ern Euro­pean coun­try’s sec­ond­largest bank by loans.

Credit Agri­cole, like BNP Paribas and So­ci­ete Gen­erale, cut in­vest­ment-bank­ing jobs and as­sets as Europe’s debt cri­sis last year curbed their ac­cess to short- term dol­lar fund­ing, reg­u­la­tors im­posed stricter cap­i­tal rules and French Pres­i­dent Fran­cois Hol­lande con­sid­ers leg­is­la­tion by year’s end to iso­late the banks’ most spec­u­la­tive ac­tiv­i­ties.

Credit Agri­cole is in “ex­plo- ra­tion dis­cus­sions” with the French gov­ern­ment on the coun­try’s planned law to re­form bank­ing struc­ture, Chif­flet told re­porters. “We’ve got the will to ne­go­ti­ate inch by inch” as part of the talks re­volve around mar­ket-mak­ing ac­tiv­i­ties, he said.

So­ci­ete Gen­erale posted an 86 per­cent de­cline in third-quar­ter profit as losses on as­set sales and a charge on its own debt out­weighed an in­vest­ment-bank­ing re­bound. BNP Paribas said on Nov. 7 that quar­terly profit more than dou­bled, helped by higher trad­ing rev­enue.

Credit Agri­cole’s cor­po­rate and in­vest­ment bank had a 302 mil­lion-euro net loss in the quar­ter, hurt by own-debt charges and the cost of sell­ing CA Cheuvreux. Ex­clud­ing one- time items, the division’s like- for- like profit fell 15 per­cent to 325 mil­lion eu­ros, the bank said.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.