Credit Agricole SA, France’s third-largest bank, reported a greater-than-estimated loss in the fourth quarter after setting aside money at its Greek consumer-banking network and writing down investments.
The shares also dropped after the net loss widened to 3.07 billion euros ($4.07 billion) from a deficit of 328 million euros a year earlier. That missed analysts’ estimates for a 2.7 billion-euro loss.
In 2012, “the main worry is the need for economic growth to get restarted,” Chief Executive Officer Jean-Paul Chifflet said in an interview with Bloomberg Television. The company, which holds the largest lending book in France, plans “to keep financing” the economy, he said.
Credit Agricole scrapped its 2011 dividend in December and said it can’t confirm 2014 targets because of “the lack of visibility on the economic and financial climate.” The bank, along with BNP Paribas SA and Societe Generale SA, is cutting investment-banking jobs to reduce costs after Europe’s debt crisis curbed trading revenue, US money-market funds reduced short-term lending to French lenders and regulators imposed stricter capital rules.
Credit Agricole fell as much as 21 cents, or 4.2 per cent, to 4.80 euros and was at 4.88 euros in Paris trading.
European financial stocks rebounded in the first seven weeks of the year after the European Central Bank provided 489 billion euros to lenders through a three-year refinancing operation in December.
BNP Paribas and Societe Generale both said last week that they wrote down their Greek sovereign-debt holdings by 75 per cent. BNP Paribas reported a 51 per cent drop in fourth-quarter earnings on Feb.15, while Societe Generale said the next day that profit in the period declined 89 per cent.
Credit Agricole said in a statement that it booked about 2.6 billion euros in writedowns on investments including its stake in Spain’s Bankinter SA and Banco Espirito Santo SA of Portugal in the quarter. The company also had 220 million euros in fourth-quarter markdowns on its Greek sovereign-debt holdings, bringing its average writedown level to 74 per cent.
While Credit Agricole’s sovereign-debt provisions for Greece are smaller than those of BNP Paribas, it had a 5.5 billion-euro net refinancing exposure to the country at the end of December through its consumer-banking network Emporiki Bank of Greece SA. The Athens-based unit had a 352 million-euro fourth-quarter loss as provisions for risky loans increased. The French lender spent about 2.2 billion euros in 2006 to amass a controlling stake in the division.
Credit Agricole can’t commit to any target for Emporiki to stop the losses, Chifflet said.
“It would be quite audacious to say that it is in 2013, 2014,” he said. “We’ll try to do it as fast as possible, but without saying when because it depends a lot on the return to growth in Greece.”
Chifflet, 62, plans to reduce “by a maximum” Credit Agricole’s exposure to refinancing Emporiki and expects Portugal to escape the contagion after Greece received a second rescue this week.
Greece sealed a 130 billion-euro bailout package by agreeing on Feb.21 to austerity measures while reducing its bond principal by 53.5 per cent as investors swap into new securities with longer maturities and lower coupons.
Greek Finance Minister Evangelos Venizelos repeated yesterday that a formal invitation for the bond exchange will be made by Feb.24. Real losses from the swap may be more than 70 per cent, analysts have said.
Credit Agricole’s corporate-and investment-banking unit had a fourth-quarter loss of 1.2 billion euros compared with a 263 million-euro profit a year earlier, hurt by a one-time 1.05 billion-euro capital-markets goodwill writedown and higher losses from subprime-era assets the lender is winding down, according to Bloomberg calculations from bank data.
The corporate-and investment-banking division also booked 336 million euros in one-time costs as it closes businesses and cuts jobs. Credit Agricole’s corporate and investment bank will close operations in 21 countries, remaining active in 32, while ending its equity-derivatives business, the firm said Dec.14.