The shockwaves from the failure of Banco Espirito Santo have reached Paris, as Credit Agricole said today it had been forced to write off a €708 million (£565 million) stake in the Portuguese bank.
That destroyed Credit Agricole’s second quarter profits, which collapsed to just €17 million from €696 million a year earlier. The write-off was well above the €387 million that analysts had expected the French bank to take on its 15% stake in Espirito Santo.
Credit Agricole’s chief executive, Jean-Paul Chifflet, apologised to investors and said he had been “misled” by the family that controls Espirito Santo. “Bad practices were unknown to us and outside of any governance procedure,” he told journalists on a conference call.
Chifflet also said Credit Agricole was entering talks with US regulators after submitting the findings of its internal review into transactions with countries subject to US sanctions. Nevertheless, Credit Agricole’s shares rose by as much as 5.5% in morning trade in Paris.
Yesterday Portugal’s central bank unveiled a €4.9 billion bailout for Espirito Santo which will hit shareholders and junior bondholders. Its shares fell 73% in the past week before trading was suspended.
Excluding the Espirito Santo losses and some other one-offs, profits at Credit Agricole, which is France’s third-largest bank, rose to €1 billion on the back of lower bad loan provisions.
