What has happened Tuesday in the Green bank for the Crédit Agricole SA (Casa) plunges on the stock exchange by more than 10% at closing? Presenting for the first time the quarterly results of the group, the new Director General of Casa Philippe Brassac, carried out a series of ads, some of which have disappointed the markets.
) The reorganization of the central body away
For several years, Crédit Agricole works confidentially on a major reform of its governance. The project, called “ROC” (reorganization of the central body) aims to trace the sovereign functions of the group, now housed in the listed entity Crédit Agricole SA, in a head structure owned by the regional mutuals. What shift the balance of power within the group, as the central organ is the heart of the institution, by having so-called sovereign powers (control, sanctions, approval of regional banks leaders), written in the Code monétaire et Financial.
The markets saw it as a simplification of the group and especially expected a strengthening of solvency Casa: the price of the transfer of the central organ for regional banks could, according to several analysts, allow the listed structure to significantly improve its core capital ratio.
Gold, Philippe Brassac said the project “ROC” could not achieve in the near future. “No operation which would change the structure of the Crédit Agricole is not feasible at this stage” , he said, referring to “exchanges” with the new supervisor European banks, the ECB, “lead to find unexercised constraints to date” . This dialogue with the regulatory authorities is “peaceful and serene” , however stressed Xavier Musca, the deputy CEO of Casa.
But the ECB does not currently seem able to commit to a very specific reform, “that could preempt further debate on European harmonization” , he added. “It was the first time they were communicating on governance. Too bad it is for bad news , one analyst. The reform represents an important potential gain for Casa, which would limit the use of convoluted solutions, such as the mechanism of “switch” to reinforce its solvency “.
) Activation of the” switch “
In the second quarter 2015, the group has activated for the first time guarantees” Switch “. This transfer complex mechanism of risk within the group (with the detention of two important assets Casa: its participation in regional funds and in its insurance business) allows Casa display a solvency ratio consistent with what required by the financial markets.
This activation of the “switch” has occurred because these two investments have lost some value, with the rapid rise in sovereign interest rates and falling equity. “The markets have realized that the ratio of core capital to Casa based in part on the switch, and therefore there is a vulnerability in this ratio rollover interest rates, as the has seen in recent months due to the Greek crisis “, says Romain Burnand, manager at Moneta. For Crédit Agricole this demonstrates the contrary “the fluid movement of capital within the group” .
) 350 million of additional provisions for the US litigation
Crédit Agricole announced Tuesday that discussions with the US authorities in the case of the violation of economic embargoes US “are now very advanced “. An agreement could therefore intervene in the coming weeks-at the latest before the end of the year. In this context, the bank has spent an additional provision of 350 million euros, bringing the total amount of its litigation reserves to 1.6 billion euros.
Markets expect the next settlement of this matter and Crédit Agricole acted in the past as reviewing transactions in this case were much smaller in scale than those of BNP Paribas. But uncertainty over the final cost of the fine looming weighed on the course of the bank’s stock.
Véronique Chocron
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