Credit Agricole Sets Discounted Rights Issue

Credit Agricole, France's biggest retail bank, announced a lower than expected price for the shares offered in its 5.9 billion euro ($9.20 billion) rights issue when it revealed terms on Wednesday.

The French bank said it would offer 1 new share for every 3 existing shares at a subscription price of 10.6 euros per share.

The price was below the 13 to 14 euros reported by a French newspaper only last Thursday and compares with the bank's share price of 21 euros on May 12  -- the day before the bank announced its plans to make the cash call.

The price equates to a 30.7 percent discount to the theoretical ex-rights price (TERP) of the shares, the bank said in a statement.

Credit Agricole shares closed 1.1 percent lower at 16.68 euros at the Paris stock exchange, while the European banking sector shed 0.8 percent.

The offer period will start on June 6 and end on June 24.

Credit Agricole, one of many banks damaged by the global credit crunch, confirmed last month plans for the rights issue, also pledging 5 billion euros of asset sales and a shake-up of its Calyon investment banking.

"The market was rather expecting a price of around 13 euros. This shows the difficulty to raise funds in current markets. This reflects rather disastrous conditions for banks," said Pierre Flabbee, banking analyst at Landsbanki Kepler.

"The dilution will be around 25 percent, so much more than what I expected," he added.

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