French bank Credit Agricole pushed back profit targets for struggling Greek unit Emporiki on Tuesday and will take a 400 million euro ($536.7 million) write-down as Greece fights its debt load.
Credit Agricole said Emporiki would return to profit in 2012 — a year later than previously forecast — and more than doubled its 2010 net loss forecast for the unit to 750 million euros in an update to investors on Tuesday.
It had previously forecast a loss of 300-350 million euros for the bank it bought in 2006 after taking an initial stake in 2000.
The bleaker outlook for Emporiki means the Greek subsidiary needs an extra 550 million euros in Tier 1 capital by 2011, Credit Agricole said.
Chief Financial Officer Bertrand Badre said on a conference call there would not be a capital raising but did not give additional details.
"A capital raising next year would be a negative surprise," said Simon Maughan, an analyst with MF Global. Emporiki last raised 1 billion euros in capital in March, he added.
Shares of Credit Agricole were down 5 percent at 9.465 euros at 1100 GMT, roughly in line with rival Societe Generale but underperforming a 2 percent fall on the STOXX Europe 600 bank index.
Both Credit Agricole and SocGen have subsidiaries in Greece, part of the reason why France has the biggest exposure to Greek debt, according to Bank for International Settlements data.
Credit Agricole also said it would write down the value of its 91 percent stake in Emporiki by 400 million euros. The write-down will be booked in results as of June 30, 2010.
Credit Agricole had been expected to reassess its 777 million euros in goodwill remaining on Emporiki, according to Keefe, Bruyette & Woods analyst Jean-Pierre Lambert.
The deteriorating economic environment in debt-stricken Greece will also bring additional cost-of-risk loan charges of 450 million euros between 2010 and 2013, though the situation should normalise by 2014, Credit Agricole said.
Deutsche Bank has said European banks could face losses of between 50 billion and 75 billion euros if the debt crisis in Greece continues to escalate and banks are forced to take a "haircut" on Greek sovereign debt.
Credit Agricole has the biggest exposure to Greece of France's listed banks because of Emporiki, which has private-sector loans of around 23 billion euros.
