Credit Agricole and Societe Generale in €600m asset swap

City A.M. Reporter
FRENCH banks Societe Generale and Credit Agricole yesterday agreed an asset swap designed to help narrow their business focus, part of efforts to improve their investor appeal in a tough economic and regulatory climate.

Like many lenders across Europe, both banks are under pressure to find new strategies to cut costs and better compete for market share as new curbs on risk taking hike the cost of doing business and as a fragile recovery at home saps revenue.

They are also battling the legal and regulatory fallout from the financial crisis, with Agricole pledging to fight any accusation by the European Commission that it had colluded to rig benchmark interest rates.

The asset swap, unveiled alongside quarterly results, will involve SocGen buying its smaller rival’s 50 per cent stake in brokerage Newedge for €275m, while Agricole will buy five per cent of their asset-management venture Amundi for €337.5m.

This would leave SocGen with all of Newedge, which offers greater exposure to foreign-exchange and commodities markets, and Credit Agricole with 80 per cent of Amundi.

Agricole swung to a quarterly profit of €728m from a €2.85bn year-ago loss on the back of a painful exit from the crisis-hit Greek market.

SocGen, which is retreating from areas such as asset-gathering and which according to trade union sources is planning up to 375 job cuts in its custody business, saw quarterly profit jump more than fivefold to €534m. Shares in both banks closed higher yesterday.