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Credit Agricole is to repay 3 billion euros ($4.5 billion) of state support this month, joining its big French rivals and overseas lenders in cutting ties to government by reimbursing state aid.
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], France's biggest retail bank, will redeem loans given in December by the SPPE, the body set up to boost the capital of banks under strain, on Oct. 27, it said in a statement on Wednesday."Credit Agricole is just following the trend of the French banks. The announcement is rather positive and the operation should be well received," said analyst Christophe Ricetti at brokerage Natixis Securities.
Its shares were 3 percent higher at 14.87 euros by 6:30 am New York time, making it one of the top gainers on a 1.2 percent firmer French blue-chip CAC 40 index.
Societe Generale last week launched a 4.8 billion euro rights issue to repay state support and fund takeovers, a week after BNP Paribas [BNPP.PA
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] said it would tap investors for 4.3 billion to repay the government.
Banks around the world are trying to cut loose from government aid, fearful of more state interference if they are partially owned or helped by taxpayers.
Compensation for staff and lending to homeowners and firms are under increasing political scrutiny and European competition authorities are set to force the biggest recipients of state aid to sell assets or cap market share in certain areas.
Lenders that took billions of euros of government funds to bail them out of the global financial crisis are repaying the aid through retained earnings or by raising money. In addition to BNP and SocGen, Italy's UniCredit and Intesa Sanpaolo last month snubbed government help.
Some are having a harder time, however. Britain's Lloyds [LYG
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] is attempting to exit a state-backed asset insurance plan, but needs to satisfy regulators it can raise enough capital to stand strongly on its own.
Credit Agricole said it was able to pay back the help due to the financial strength of the group.
The repayment is possible thanks to Agricole's success in selling debt in recent months, including $1.35 billion to private banks in Asia and Europe and $1 billion to the U.S. institutional market, it said.
It would "continue to honor its commitment to actively deliver new loans to the economy" and would follow guidelines laid down by the French banking federation on pay and bonuses, the bank said.
Credit Agricole is also planning a two-part Tier 1 benchmark bond totaling 850 million euros, split into two tranches, one of 500 million euros and one of 300 million pounds ($479 million), IFR Markets, a Thomson Reuters online news and market analysis service, reported on Wednesday.
Credit Agricole had not issued any preferred shares under a second tranche of the recapitalization scheme by the French government.
BPCE bank on Monday unveiled plans to issue deeply subordinated Tier 1 notes in the near future to help repay 4 billion euros of state support. The French economy ministry has said Credit Mutuel has also repaid it.
The moves by French banks reflect wider efforts by banks in Europe and the United States to take advantage of a pick-up in stock markets to regain their financial autonomy.
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