Crédit Agricole is heckled on the stock exchange on Tuesday. At 12:50, the title CASA, biggest drop in the CAC 40 index (-0.6%) and plunged 10.86% to 12.84 euros, not far from a low point to 12.90 euros in the expanded volumes (3.2 times their daily average of the last three months on Euronext). If it closed at this level, it would show its largest decline in one session since 1 November 2011
The reason:. The disappointment of investors about the group’s reorganization plan . Crédit Agricole has indeed announced at the publication of its quarterly results, that its project rebalancing links listed structure CASA head with his regional banks was “not feasible at this stage.”
“Problem with the group structure”
This reform proposal provided that the Federation political body recovers the central body powers held by Casa, but regulatory constraints have been lifted by the European Central Bank, the company said. “ At this stage there is no operation that could materially modify the scope of which is envisaged Casa “, said Tuesday the Director General Philippe Brassac.
Investors hoped that the bank communicates a specific waypoint on this site, discussions for several years. “ There is a problem with the structure (of the group) and nothing seems very clear about the situation (…) As long as nothing is clarified about it or we will not know further, it is best to get out and stay out , “says Reuters an equity manager based in Paris. “ It is amazing for waiting now to admit some roundabout way that there was a problem. The shape as much as the bottom displeases , “he added.
Increase in provision for litigation
The group also announced Tuesday it had revised upwards its litigation reserve, which now stands at 1.6 billion euros. Crédit Agricole hope to finish this year with the US investigation on payments in dollars to countries subject to embargo. Following discussions “very advanced” with the US authorities, “ we considered that we had to increase our litigation provision of 350 million euros, said the CEO of Crédit Agricole SA, Philippe Brassac. We count on a resolution in the coming months, by the end of 2015 , “he said.
In a similar case, its French rival BNP Paribas was sentenced to record penalties and had to pay the sum of 6.6 billion euros. Crédit Agricole had however assured last year that reviewed transactions within this framework were smaller in scale than those of BNPP.
New commercial project
Philippe Brassac, which presented Tuesday its first results after taking the reins of Casa, the listed entity of the group in May, made reattach compliance function, which ensures compliance with regulations, to general management. This change is part of an overhaul of the organization Casa around four business lines and three poles “transverse”. Philippe Brassac wants to build on this staff to present in September a new business project and to reflect on the changes in the organization of the group.
Financially, Credit Agricole recorded a rise in net profit in the second quarter, whereas a year earlier results had been sealed by the disappointments of Portuguese bank BES in which he held an interest. Casa has posted a net profit of 920 million euros, against 17 million euros a year earlier, better than expected by analysts who had expected a profit of 859 million, according to a consensus broadcast by FactSet .
Net profit increased
Excluding exceptional items, net income increased by Casa 6.2% a year, and the Crédit Agricole Group, which incorporates all the results of regional banks, was stable at 1.5 billion euros.
These are the poles savings and insurance (asset management, private banking and insurance) and specialized financial services (consumer credit, leasing …) that are driving growth, with an increase of 16.7% of profits, respectively (457 million euros) and 45.2% (to € 125 million).
The financing and investment banking (CIB), which supports the new provision for litigation, sees its earnings melt 82 million euros. Excluding items, earnings decreased by 8.3% year on year, particularly penalized by the depreciation of two entries.
retail banking side, the regional banks saw their net banking income (GNP equivalent of revenues) to increase by 1.9% to € 3.5 billion, when LCL has seen his fall by 1.4% to € 944 million.
switch mechanism
The group has activated the mechanism this quarter “switch” whereby regional banks to provide a guarantee when it drops Casa its unrealized capital gains.
This transaction enabled the listed structure to save 80 million euros in net income this quarter, and 3 basis points (0.03 percentage points) on its capital ratio “hard” (the shareholders’ contributions and retained earnings reported to Credits). It reached 10.2% at the end of June, unchanged from the end of March.
With AFP and Reuters
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