FRENCH bank Credit Agricole yesterday sold its Greek subsidiary to Alpha Bank for €1 (£0.81), taking a multi-billion euro loss on the entity as it at last managed to slash its exposure to the recession-struck economy.
The bank is taking a €2bn writedown on the Emporiki unit, and has increased its recapitalisation of the subsidiary by €550m on top of the €2.3bn pumped into the Greek entity in July.
The deal reduces Credit Agricole’s €2.1bn funding of the unit by €700m immediately, and completely in three more installments by the end of 2014.
“While Credit Agricole will take a circa €2bn profit hit in the third quarter of 2012 as a result of the disposal, the impact on capital ratios will be offset somewhat by the corresponding reduction in risk-weighted assets,” said analyst Michael Symonds from Daiwa Capital Markets.
“Exiting Greece is undoubtedly positive for Credit Agricole’s credit profile, but this development is already largely reflected in credit spreads following recent sharp tightening.”
The bank said the move would help it reach its 2013 solvency targets, while at the same time aid the Greek banking system’s consolidation, “which is an essential condition for the recovery of the country’s financial sector.”
Credit Agricole’s shares dropped 1.9 per cent yesterday, but remain up almost 20 per cent on the start of the month when the divestment plan was outlined.