Credit Agricole pledges stable returns after capital revamp

Credit Agricole promised stable investor returns and a solid capital base in the future as the French bank outlined plans on Wednesday to simplify its much-criticized ownership structure.

Credit Agricole Chief Executive Philippe Brassac said the plan would put to rest criticism from analysts, shareholders and regulators that the cross-shareholding between its listed entity and its cooperative parent banks was too complex.

Investors welcomed the news, sending the stock 6 percent higher in opening trade.

Lionel Bonaventure | AFP | GettyImages

Detailing the plan first announced last month, the bank said its listed entity would sell its 25 percent stake in the parent banks back to them for 18 billion euros ($20 billion).

The listed entity would repay 5 billion euros to the parent banks to unwind an intragroup guarantee mechanism while also lending them 11 billion euros over 10 years to fund the stake purchase in a deal expected to be completed in the third quarter.

"At the end of the day we will have a much more understandable and simpler group, because what used to be entangled will be disentangled," Brassac told a news conference to present the plan and the bank's 2015 results.

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