Credit Agricole sealed by the troubles of the Portuguese bank Espirito Santo

The setbacks of the Portuguese bank, saved from bankruptcy this weekend, began to 708 million euros the accounts of the French group, shareholder 14.6% of BES.

Le siège du Crédit agricole SA à Montrouge, en 2013.

This is like a “collateral damage”. Crédit Agricole announced Tuesday, August 5, a profit in free fall in the second quarter, to 17 million euros, against 696 million euros a year earlier. A dive that is explained by the exposure of the French group to the Portuguese bank Espirito Santo (BES), saved from bankruptcy this weekend thanks to its recapitalization to the tune of 4.4 billion euros by the Portuguese State.

Crédit Agricole has seen its accounts started by 708 million euros because of this case. The French bank has indeed seen the value of its stake in the Portuguese bank go from 14.6% to zero, and had to assume part of the record quarterly loss (3.57 billion euros) suffered by BES. In detail, the group, therefore, has a deficit of 502 million euros for losses and 206 million euros for the depreciation of the value of the stake.

“TRUMPED BY A FAMILY”

Excluding exceptional items, namely the expense related to BES and accounting items, Crédit Agricole reported a profit of 1.69 billion euros and its listed structure CASA, a profit of 1 billion euros.

Credit Agricole said he was “deceived by a family with whom he had tried to create a true partnership”. The group also plans to sue the former BES management team, chief executive Jean-Paul Chifflet said in a conference call. The group does not rule out going to court alone when the results of ongoing investigations to determine the responsibility of the leaders of the group in this fiasco will be known.

PARTNERS SINCE THE 1980s

BES had to be saved from bankruptcy this weekend by the Portuguese state, after having been put in great difficulty by the setbacks of its main shareholder, the Espirito Santo family. The Bank of Portugal has decided to transform the sound part of BES into a new bank financed by a loan from the Portuguese state, while the toxic assets are left in the hands of its shareholders.

A partner of the Espirito Santo family since the mid-1980s, and then a shareholder in the BES bank in 1990, Crédit Agricole has withdrawn from 2012 as part of the refocusing of its assets. At the end of 2013, after the first write-down of 267 million euros, its shares in the Portuguese bank were valued at 816 million euros.

But, meanwhile, the capital increase of BES in the spring has resulted in a dilution of the participation of the French bank and allowed him to limit the damage. Mr. Chifflet notably ensured that the situation of BES had no impact on the solvency ratio of CASA and an impact limited to 7 basis points (0.07 percentage point) on the ratio of the group.

The title of the bank Credit Agricole took off nearly 6% Tuesday morning at the Paris Bourse, investors praising its good operating performance, despite the poor quarterly results.