Credit Agricole SA has reached an agreement with Banca Intesa to take control of Cassa di Risparmio di
These banks and branches, which will be acquired at a cost of EUR 5.96 bln, are expected to be ultimately owned 70% to 80% by Credit Agricole, 10% by the Credit Agricole Regional Banks and 10% to 20% by the Cariparma Foundation.
Credit Agricole’s participation in the Italian entity will be financed by a combination of own funds and an equity capital increase that will be partly subscribed by the Credit Agricole Group Regional Banks.
The agreement should also pave the way for Banca Intesa and SanPaolo IMI’s merger and lead to the dilution of Credit Agricole’s 17.8% stake in Banca Intesa to 9% and thereafter to below 5%.
Moody’s Investor Service commented that the transaction should not alter the Aa2/P-1/B+ ratings with a stable outlook of Credit Agricole, which reflect the creditworthiness of the Credit Agricole Group.
Moody’s said that it views positively the fact that Credit Agricole will have a significant direct presence in the Italian retail banking market — a market that it knows well and that offers material growth opportunities.
Credit Agricole is gaining a quality network with distribution access, in particular, to relatively wealthy northern Italian regions. Its Italian network will be well complemented by its joint-venture operations in leasing with Banca Intesa and in consumer finance with the FIAT Group, the latter transaction being due to close by end-2007.
These acquisitions fit well with the Credit Agricole Group’s retail expansion strategy abroad, added Moody’s. The Group will be firmly established in several major western European markets, particularly
From a risk perspective, the size of acquired operations remains relatively small — i.e. some EUR 20 bln in risk-weighted assets compared with risk-weighted assets of EUR 480.5 bln for the Credit Agricole Group at end-2005.
Moody’s commented that its chief concern relates to the Group’s ability to execute, integrate, realise synergies and successfully manage and develop serial acquisitions made within a relatively short time span.
These notably include, since early 2006, the purchase of controlling stakes in the Egyptian American Bank of
Moody’s said that a period of consolidation of recent acquisitions would most likely benefit the Group at this stage. The rating agency also warned that new acquisitions in the short-term could well put some pressure on the French banking Group’s financial strength rating.
Credit Agricole SA’s total assets rose by 29.9% to EUR 1,061 bln at end-2005 and its net profit, group share, progressed by 42.8% to EUR 3.9 bln. At half-year 2005, net profit, Group share, stood at EUR 2.7 bln (+43.1%).
Meanwhile, Credit Agricole Group’s total assets rose by 28.1% to EUR 1,170 bln at end-2005, whilst its net profit, Group share, progressed by 31.8% to EUR 6 bln. At half-year 2005, Credit Agricole Group’s total net profit, Group share, stood at EUR 3.5 bln (+29.5%).
