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Credit Agricole is next bank to tap the market
Another European bank calling on shareholders to boost ailing capital ratios. Credit Agricole wants €5.9bn.
Les Echos had the story.
In setting its Tier 1 target at 8.5 per cent, Credit Agricole is broadly in line with UK peers that have bolstered their balance sheets for tough times ahead. RBS’s increased range for Tier 1 was 7.5 to 8.5 per cent, with the rights issue designed to take it above the 8 per cent mark. HBOS went for a new Tier 1 range of 8 to 9 per cent.
No word yet on whether Calyon chief executive Marc Litzler survives. It’s not looking good.
Further to detailed rumours in the media, Credit Agricole S.A. is making the following clarification:
As scheduled the Board of directors of Credit Agricole S.A. will meet on Wednesday 14 May 2008 to review the accounts for the first quarter 2008, and to decide on a rights issue.
Credit Agricole S.A. net income group share in the first quarter 2008 should amount to €892 million after €1,205 million Calyon subprime related negative impact on the net banking income.
In an uncertain market environment the group sets the objective of a Tier One ratio of 8.5 per cent and of keeping this ratio between 8.0 and 8.5 per cent as long as the market conditions remain unchanged. The rights issue planned for this purpose is €5.9 billion.
Credit Agricole S.A. will also be launching an action plan focusing on the following areas:
- Refocus the corporate and investment banking division on its core competences and key customer base with a reduced risk profile, decrease the proportion of capital allocated to these activities and significantly reduce its fixed cost base
- Steady growth and an increase of the relative weight of the retail banking and specialised business lines, coupled with cost control measures
- Active management of the asset portfolio
The announced rights issue will allow Credit Agricole S.A. to maintain its competitive advantage in the context of a longterm strategy based on:
- The solid underlying strength and recurrent growth outlook of the retail banking and specialised business lines
- The advantages and the strengths of its diversified range of businesses and the power of its integrated business model in France, and being rolled out internationally
- A corporate and investment banking operation refocused on its core competences
Related links
Credit Agricole plan €5.9bn rights issue - FT.com
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IMO rates still coming down, but not as far (say 4% bottom) and not as fast. Also CPI to get very close to 4% (as I posted yest on ML; today’s fig missed exps by fully 0.4%).
No letter yet, 3.1% the trigger, but it’s coming.
Good job there’s some 7% fixes around on savings, because that’s what a 40% taxpayer needs to get b/e on 4.2% RPI.
I hope not too! But I can’t deny it’s a fear that lurks at the back of my mind. Somehow the value of property (and equity?) assets had got totally out of kilter with everything else, and we will doubtless see a correction. i.e. we’ll need to spend more on food and fuel, and less on ipods and frivolous services. Sounds like we’ll be meeting the developing countries half way… if we’re lucky
I hope not! I have just negotiated a tracker on my mortgage. I still think the trend will be for interest rates to come down. There is a lag effect on inflation. Eventually reduced demand and increasing supply will bring prices back down so I can see IR holding steady for a while until this effect starts to be seen. Raising IR would be a very dangerous signal in an already jittery market
Re CPI - be interesting to see how Merv copes with being between the monetary rock of CPI and the political hard place of property ‘wealth’. BoE base rates 6% by year end, anyone?
anyone around? inflation figures just out - not pretty. Looks like Merv will be getting out his pen and paper