Credit Agricole SA, France’s third- largest bank by market value, said it may raise EUR5.9 billion ($9.2 billion) in a rights offer to replenish capital as first- quarter profit dropped on subprime-related writedowns, Bloomberg reports.
Net income fell 66% to EUR892 million from EUR2.66 billion in the year-earlier period, the Paris-based company said in an e-mailed statement today. Analysts surveyed by Bloomberg had estimated earnings of EUR1.19 billion.
Credit Agricole fell as much as 7.1% in Paris trading after announcing the capital increase. The bank also plans to cut risk and fixed costs at Calyon, its corporate and investment bank, after the US subprime mortgage market collapse reduced revenue by EUR1.21 billion last quarter. Marc Litzler, the head of Calyon, may be replaced as soon as this week, three people with knowledge of the matter said May 11.
“They will downscale Calyon and reduce trading positions and that’s very good,” says Alain Tchibozo, an analyst with ING Financial Markets in Paris.
Credit Agricole fell EUR1.14, or 5.5%, to EUR19.59 by 3:43 p.m. The stock has lost 40% in the past 12 months, compared with a 23% decline at BNP Paribas SA, France’s largest bank, and a 50% slump at Socit Gnrale SA, France’s No. 2 bank by market value.