Crédit Agricole may drop Emporiki
It is claimed Crédit Agricole bank is considering abandoning its Greek subsidiary, which has already lost it €6 billion
THE Crédit Agricole is making plans to walk away from its loss-making Greek bank Emporiki, it is claimed.
According to the Wall Street Journal, quoting “a person with knowledge of the plans”, the bank is looking at two options in the event that Greece leaves the Eurozone: consolidating it into a larger conglomerate of Greek banks, in which Crédit Agricole’s stake would be diluted to 10% (it currently owns 67% of Emporiki); or “walking away and letting Emporiki fail”.
The paper said the latter action could expose the Crédit Agricole to risks to its reputation and potential legal problems, which “would echo its abrupt departure from its Argentine bank units 10 years ago after the Latin American country defaulted on its debt.”
The comments come as Greece prepares for crucial elections on Sunday - the left-wing Syzria party is equal in the polls with the conservative New Democracy party and rejects the terms of the Greek EU bailout package, without which it is likely Greece will default.
President Hollande has warned Greece that “If the impression is given that Greece wants to distance itself from its commitments and abandon all prospect of recovery, there will be countries in the euro zone which will prefer to finish with the presence of Greece in the euro zone.” The prime minister of Slovakia has said he, for one, “will demand it”.
Many international companies have said they are preparing contingency plans and many investors are said to have been taking their money out of Greek banks.
French daily Le Monde said it is true a withdrawal from Greece is one of the options being considered by the bank. However, according to its sources, “there is no question of a sudden withdrawal”. If it happened, it would be “organised gently, in consultation with supervisory bodies in France and Greece”.
It does not want a repetition of the Argentine affair, the paper said. Furthermore, the Banque de France has also told Crédit Agricole that if there is a pull-out, it must be done as gently and as “cleanly” as possible. Crédit Agricole’s preferred solution would reportedly be to find a partner in Greece to take over its stake in Emporiki, the sources said.
Its investment in Emporiki has so far lost the French bank around 6 billion euros and it is thought that it is likely to cost it around another five to come to a solution – a massive sum, but one that French banking authorities believe Crédit Agricole can weather, as it has some €70 billion of capital.
A bank spokesman told Le Monde it had always supported Emporiki despite the crisis and it does not think Greece coming out of the Eurozone is the most likely scenario.
Concerns over Emporiki is known to be one of the reasons Crédit Agricole’s shares dropped 70% over the last year, causing anger at the last shareholders’ meeting.
