Bloomberg News

Credit Agricole Falls on Greece Impact of Up to EU850 Million

July 29, 2011

July 29 (Bloomberg) -- Credit Agricole SA, France’s second- largest bank by assets, fell in Paris trading after saying losses at its Greek unit and costs tied to Europe’s aid plan for the country will lower its second-quarter profit by as much as 850 million euros ($1.22 billion).

Credit Agricole declined as much as 3.7 percent, and was down 22 cents to 8.60 euros by 10:52 a.m. in Paris. The bank still expects to post a net profit for the quarter when it publishes earnings on Aug. 25, it said in an e-mailed statement after the close of trading yesterday.

The French bank, led by Chief Executive Officer Jean-Paul Chifflet, said it “welcomes” the effort of euro-region leaders to provide additional support to Greece. The participation of its Emporiki Bank of Greece SA in a program to involve private investors will result in an estimated 71 million-euro impairment to the unit’s Greek government bond holdings. Increased funding costs and higher-than-expected loan defaults at Emporiki will also contribute to a loss of about 451 million euros at the unit in the quarter, the bank said.

“The current and expected situation for the coming quarters makes reaching Emporiki Bank’s goal for breakeven of its financial results by the end of 2012 more difficult,” Credit Agricole said in the statement. The unit “will continue to implement its restructuring plan, which will keep bearing results, adjusting it whenever necessary to the economic environment, in order to return to break even as soon as possible,” it said.

Funding for Emporiki

Emporiki will continue to seek local sources of funding, such as deposits, to reduce Credit Agricole’s need to finance the unit. Those efforts have already lowered the refinancing from the French bank by about 1 billion euros since the end of March, Credit Agricole said.

Credit Agricole plans to write down the remaining 359 million euros of goodwill tied to Athens-based Emporiki in the second quarter. Overall, the support plan for Greece will have an impact of about 150 million euros for Credit Agricole.

--Editors: Stephen Taylor, Dylan Griffiths

To contact the reporter on this story: Frank Connelly in Paris at fconnelly@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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