Crédit Agricole SA said Wednesday it will sell its Greek banking arm Emporiki to Alpha Bank for €1 ($1.31), and said its bottom line would take a hit of €2 billion as a result of the sale.
The deal will help end the French bank’s disastrous foray into the Mediterranean country, but it will come at a cost. Crédit Agricole said that, as previously announced, before completion it will increase its recapitalization of Emporiki to €2.85 billion, having already injected €2.3 billion in July 2012. In addition, it will subscribe to €150 million of convertible bonds to be issued by Alpha Bank, redeemable in Alpha Bank shares.
It said that it is also considering buying assets from Emporiki and Alpha Bank, which would reduce the amount of its residual funding to Emporiki accordingly.
Crédit Agricole, France’s third-largest listed bank, said the financial impact of the sale will be to shave €2 billion from its net income for the third quarter of this year, based on best estimates of all losses and costs arising as a result of the transaction until its completion.
Crédit Agricole acquired Emporiki in 2006 as part as a plan to expand its presence in Southern Europe. The acquisition saddled the bank with billions of euros in losses as bad loans rose and fears over an eventual Greek exit from the 17-nation currency bloc shattered consumer confidence. Emporiki booked losses totaling €4.42 billion over four years from 2008 to 2011, and another €1.28 billion loss in the first six months of 2012 alone.
(source: dowjones)
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