CREDIT Agricole SA, France's biggest retail bank, will sell assets and restructure its Calyon investment banking arm, it said yesterday as it confirmed a 5.9 billion-euro (US$9.1 billion) rights issue.
Agricole said it would cut about 10 percent of costs at Calyon, which has been hit by the global credit crunch.
"Credit Agricole has paid the price of this crisis," Chief Executive Georges Pauget told reporters.
The bank said it would continue to sell non-core assets to bolster its financial position and had identified around 5 billion euros of potential disposals to be made over 18 months.
Agricole unveiled the key elements of its first-quarter results and its planned rights issue earlier this week. It formally published the full first-quarter figures yesterday.
"The rights issue will be launched before the summer, subject to market conditions," Agricole said.
Agricole's first-quarter net profit fell 66 percent to 892 million euros, hit by a 1.2 billion euro writedown at Calyon.
The bank said Calyon registered a first-quarter loss of 795 million euros. Agricole also confirmed press reports that Patrick Valroff, previously head of Agricole's consumer credit arm Sofinco, would replace Marc Litzler as Calyon chief executive.
Litzler came under pressure last September after Calyon announced an unauthorised trading loss. It had to book a 250 million euro charge related to an unauthorized trading position at its New York subsidiary.
Pauget said Litzler would remain within the company, taking on a new "internal advisory" role. Agricole shares were down 0.8 percent at 19.34 euros yesterday morning. The DJ Stoxx European bank sector was down 1.1 percent.
Agricole's rights issue is the latest capital-raising exercise from a global banking sector damaged by losses in the US subprime mortgage market. Last month, British banks Royal Bank of Scotland and HBOS announced plans to raise 12 billion pounds (US$23 million) and 4 billion pounds respectively, through rights issues. Agricole's profit fall also follows a slump in earnings at France's top banks.
Societe Generale, hit by a rogue trader scandal, reported a 23 percent fall in first-quarter net profit this week, and France's biggest listed bank BNP Paribas posted a 21-percent drop in net profit.