Credit Agricole takes $950M Espirito Santo hit
Credit Agricole said it took a 708 million euro ($950 million) hit related to its stake in troubled Banco Espirito Santo (BES) that nearly wiped out the third-biggest French listed bank's second-quarter net profit.
Portuguese bank BES, in which Credit Agricole has been a key shareholder since the early 1990s, posted a 3.6 billion euro first-half loss last week and unveiled higher-than-expected provisions to cover exposure to companies owned by its founding Espirito Santo family.
"Today the group must deal with the issues specific to the Espirito Santo family and which took place outside the sphere of the bank's corporate governance and which were unknown to us," Credit Agricole Chief Executive Jean-Paul Chifflet told journalists.
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"We can only regret having been misled by the family with which Credit Agricole was trying to create a true partnership to build the biggest private bank in Portugal."
Credit Agricole, which is majority owned by a network of cooperative regional lenders and owns 14.6 percent of BES, said on Tuesday that second-quarter net income fell 97.5 percent to 17 million euros.
The bank is now trying to refocus on its domestic business and move on from an era of ill-timed cross-border deals.
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Quarterly revenue slid 6.1 percent to 3.934 billion euros. That was above the mean analyst estimate of 3.91 billion, according to figures compiled by Thomson Reuters I/B/E/S. Results were mixed at the lender's retail units, while profit at its investment bank jumped 8.8 percent, helped by its fixed income business and participation in some major merger and acquisition deals.