Credit Agricole In Talks For Sale Of CLSA To Citics
03/29/2012| 10:06pm US/Eastern
(Updates with statement by the Citic Securities in paragraph eight and nine.)
By Noemie Bisserbe
Credit Agricole SA (>> CREDIT AGRICOLE), France's third-largest bank by market capitalization, is in talks with China's Citic Securities (600030.SH) for the sale of its Hong-Kong based brokerage business CLSA, the two companies said Thursday.
If completed, the sale could help Credit Agricole move forward with its restructuring plans, as the French bank strives to meet Europe's tough new financial regulations, and cope with the still rumbling euro-zone debt crisis.
"In view of new developments in economic conditions and the recent discussions between the parties, a consensus has been reached to modify the transaction announced last July and consider an alternative transaction structure," said the two companies in a joint statement.
Citics had earlier agreed to buy two stakes of 19.9% each in Credit Agricole's broking businesses Cheuvreux and CLSA for $374 million to create a global business spanning Europe and Asia. However, the deal remained stuck, as it never received regulatory approval.
While the sale of a 19.9% stake in Cheuvreux is now off the table, Citics could buy all of CLSA, provided the transaction receives corporate and regulatory approval, said the two companies.
Credit Agricole and Citics aim to conclude talks "within a short timeframe", they said.
The new orientation of Cheuvreux is currently under review and will be announced at a later stage, they added.
In a filing to the Shanghai Stock Exchange in China, Citic Securities said Friday that its board of secretary has approved the plan to acquire the 19.9% stake in CLSA but will no longer buy the 19.9% stake in Cheuvreux.
But the largest securities company by assets in China added that it has authorised the management to negotiate on the trading prices, financial terms and the scope of assets in the deal, indicating that the door is open for the sale of the whole of CLSA although it didn't address it directly.
Like crosstown rivals BNP Paribas (>> BNP PARIBAS) and Societe Generale (>> SOCIETE GENERALE), Credit Agricole is in the midst of a major downsizing plan to increase its capital buffers and reassure investors about the bank's financial strength.
Credit Agricole said in December it would cut 2,350 jobs, including 1,750 at its corporate and investment bank. The company also said it would stop offering investment-banking services in 21 of the 53 countries in which those services are offered. Overall, the plan aims to reduce the bank's financing needs by 50 billion euros ($66 billion) by the end of next year, Credit Agricole said.
Credit Agricole said last month the Greek crisis and restructuring costs in the fourth quarter drove it to its heaviest net loss since it went public a decade ago. The Paris-based lender posted a fourth-quarter net loss of EUR3.1 billion compared with a EUR328 million net loss a year earlier.
-By Noemie Bisserbe, Dow Jones Newswires; +33 1 4017 1740;
-Amy Li contributed to this article