NEWS | Wednesday, 14 May 2008

Write-down woes for French banks

France’s biggest retail bank, Credit Agricole, is contemplating asking shareholders for 5.9bn euros (£4.7bn; $9.1bn) to help its financial position.
The move comes after more write-downs at its Calyon investment banking unit as a result of the credit squeeze.
Meanwhile, the country’s second-largest bank, Societe Generale, said its own write-downs had led to a 23% fall in profits in the first quarter of 2008.
Net profit fell to 1.1bn euros in the period from 1.43bn euros a year ago.
Losses at SocGen’s global investment management arm were blamed for the dip.
In January this year, SocGen announced 4.9bn euros of losses which it blamed on rogue deals carried out by Jerome Kerviel - a junior trader at the bank. However, the bank said that it was managing the fall-out of those losses.
Credit Agricole expects to make a net profit of 892m euros in the quarter - down 66% from last year and much worse than many analysts had predicted.
The struggling Calyon unit is set to write off 1.2bn euros during the first three months of the year as a result of the credit crunch.
Credit Agricole’s shares fell sharply on news of the rights issue - down by more than 6% by midday trading.
“The fact that they need another six billion euros of capital is worrying and I’m staying cautious (on the stock),” one Paris dealer said.