Bloomberg News

Credit Agricole to Cut Debt by 50 Billion Euros, Trim Financing

September 28, 2011

Sept. 28 (Bloomberg) -- Credit Agricole SA, France’s third- largest bank, said it will cut debt by 50 billion euros ($68 billion) by December 2012 and reduce the company’s balance sheet as the sovereign-debt crisis crimps financing options.

Credit Agricole will slash financing needs at the corporate- and investment-banking unit by 15 billion euros to 18 billion euros and by 21 billion euros to 23 billion euros at the retail-banking business, the Paris-based company said in an e- mailed statement today. It will cut funding requirements at the specialized financial services unit by 9 billion euros to 11 billion euros, it said.

“Banks have experienced sustained pressure on liquidity in the last few months,” the lender said in the statement. “Prudent requirements have become tougher and banks need to reduce leverage and strengthen balance sheets.”

Credit Agricole plans a “gradual discontinuation of some businesses” at the investment-banking unit and will make disposals of loans in specialized financial services along with “withdrawals of certain businesses” at the division, it said.

Credit Agricole fell 3 cents, or 0.5 percent, to 5.16 euros at 2:50 p.m. in Paris trading.

Credit Agricole, hurt by its unprofitable Greek consumer- banking unit, joins BNP Paribas SA and Societe Generale SA, France’s two largest banks, in trimming its balance sheet to help meet new Basel III capital requirements.

Europe’s deepening sovereign-debt crisis and a dearth of short-term U.S. dollar funding forced BNP Paribas and Societe Generale earlier this month to announce steps to trim about 300 billion euros off their balance sheets.

Credit Agricole last month reported a smaller decline in net income than analysts estimated and reiterated its profit goal. The company booked a 202 million-euro pretax writedown on Greek sovereign debt in the second quarter.

--Editors: Stephen Taylor, Jon Menon

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net.

To contact the editors responsible for this story: Frank Connelly at fconnelly@bloomberg.net; Edward Evans at eevans3@bloomberg.net.


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