Credit Agricole to Take Credit-Related Writedown
France's biggest retail bank Credit Agricole said on Thursday it would book a 2.5 billion euros pre-tax writedown in 2007 due to the credit crisis gripping global financial markets.
"In total, the impact of these measures on the 2007 results should be around 1.6 billion euros (2.5 billion euros before tax)," Credit Agricole said in a statement.
Credit Agricole said its Calyon investment banking arm would have "negative results" for the full year ending Dec. 31 but Agricole would not have to cut its 2007 dividend.
In November, Credit Agricole posted a 16.8 percent fall in its third quarter net profit as its earnings were hit by a previously disclosed trading loss at Calyon.
Credit Agricole's update follows similarly negative results from Wall Street banks hit by the credit and subprime mortgage crisis. Bear Stearns on Thursday announced the first loss in its history.
Credit Agricole said its writedowns related to super-senior collateralized debt obligations and took into account a decision by ratings agency Standard & Poor's to cut the rating on bond insurer ACA Financial Guaranty to junk status. ACA FG is a unit of ACA Capital Holdings
"Credit Agricole reiterates that this writedown does not correspond to an actual loss on the related assets but a conservative appreciation of the current worsening market conditions," the bank said.
Credit Agricole shares closed down 0.65 percent at 22.87 euros. The stock has fallen by around 27 percent since the start of 2007, compared to an 18 percent decline in the DJ Stoxx European bank sector.