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Credit Agricole plans €5.9bn rights issue

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Date: Tuesday 13 May 2008

LONDON (ShareCast) - Shares in Credit Agricole plunged today after the French banking giant announced plans to launch a €5.9bn rights issue as first net profit in the first quarter dropped by 66%.

The group joins a number of other banks, including UBS and Royal Bank of Scotland, in asking its shareholders for new funds.

Net profit fell to €892m in the first quarter from €2.66 last year after a €1.21bn credit crunch related write-down at its investment banking unit Calyon.

The bank said it is considering the capital increase to preserve its Tier One ratio.

“In an uncertain market environment the group sets the objective of a Tier One ratio of 8.5 per cent and of keeping this ratio between 8 and 8.5% as long as the market conditions remain unchanged,” it said.

Credit Agricole refused to comment on press rumours that Calyon chief executive Marc Litzler will be replaced.

Also in the banking sector, Belgo-Dutch Fortis saw first quarter earnings decline 31% to €808m due to a €380m hit from the credit crunch.

Meanwhile, Societe Generale, France's second- largest bank by market value, said first quarter net profit fell by 23% to €1.1bn.

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