French banks showed the scars of the
financial crisis on Thursday, with heavy asset writedowns
stripping Credit Agricole () of all but a sliver of
profit and plunging Natixis () to a billion euro loss.
Agricole, France's biggest retail bank, revealed a 94
percent fall in second-quarter profit, hit by another loss at
its Calyon investment bank, while second-tier Natixis sank to a
loss of 1.02 billion euros ($1.51 billion) from a profit of
1.01 billion a year ago, after 1.5 billion euros of writedowns.
"This is the most significant, most violent and most
long-lasting of all the financial crises we've had since the
war," Natixis Chief Executive Dominique Ferrero told French
business radio station BFM.
Earlier this month, France's other two big banks also
reported tumbling second-quarter figures, with Societe
Generale's () net profit down 63 percent and BNP Paribas
() showing a 34 percent fall.
Agricole's net profit shrank to just 76 million euros from
1.29 billion euros a year earlier. Gross operating profit also
dropped 94 percent from last year to 102 million euros.
A Reuters poll of 18 analysts had given a wide range of
earnings forecasts for Agricole, from a net loss of 597 million
euros to a profit of 970 million.
The bank's performance was hit by around 1.1 billion euros
of writedowns related to the credit crisis and monoline
insurers, which Agricole said had a negative impact of 693
million euros on Calyon's earnings.
Calyon made a second-quarter net loss of 855 million euros.
The Reuters poll gave an average estimate for a Calyon loss of
604 million euros, with estimates on writedowns ranging from
600 million to 2.36 billion euros.
Iris Finance fund manager Michael Sellam, whose portfolio
includes both Agricole and Natixis shares, said one positive
item in Agricole's results was the fact that the writedowns
were not as bad as some had feared.
"People are saying that we're not far from the end of the
tunnel for Agricole," said Sellam.
NATIXIS RIGHTS ISSUE
Agricole shares reversed earlier losses to rise 4.4 percent
in mid-morning trade, while Natixis stock was down 7.7 percent.
Agricole shares have fallen around 35 percent since the start
of the year, while Natixis stock has plunged around 60 percent.
Agricole, which recently ousted Marc Litzler as Calyon
chief executive, aims to cut costs and trim the division, which
has been making losses for several quarters.
Agricole completed a 5.9 billion euro rights issue in July
to shore up its finances and has also pledged 5 billion euros'
worth of asset sales. The bank has said it will not make any
major acquisitions in the near future.
Natixis is also in the process of putting together a 3.7
billion euro rights issue designed to strengthen its finances.
The bank is expected to announce details within days.
A source familiar with the matter told Reuters on Wednesday
that Natixis was expected to set a discount of between 35 and
40 percent for the rights issue, while analysts in a Reuters
poll forecast a price range of 3.35-5.50 euros.
Natixis holds a shareholder meeting on Friday to vote on
the terms of its capital increase, which should be a formality,
as French mutual banks Caisse d'Epargne and Banque Populaire
have committed to the issue and together own about 70 percent.
But the two controlling shareholders still want other
shareholders on board to avoid shrinking the public free float.
Market watchers also said Natixis might need a deep
discount to ensure the success of the operation after British
banks Bradford & Bingley (BB.L) and HBOS (HBOS.L) recently
struggled to sell their rights issues to investors.
(Editing by Will Waterman)
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