May 13 (Bloomberg) -- Credit Agricole SA, France's third- largest bank by market value, said it may raise 5.9 billion euros ($9.2 billion) in a rights offer to replenish capital as first- quarter profit dropped on subprime-related writedowns.

Net income fell 66 percent to 892 million euros from 2.66 billion euros in the year-earlier period, the Paris-based company said in an e-mailed statement today. Analysts surveyed by Bloomberg had estimated earnings of 1.19 billion euros.

Credit Agricole fell 5.6 percent 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 U.S. subprime mortgage market collapse reduced revenue by 1.21 billion euros 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,'' said Alain Tchibozo, an analyst with ING Financial Markets in Paris.

Credit Agricole fell 1.17 euros to 19.56 euros. The stock has lost 40 percent in the past 12 months, compared with a 27 percent decline at BNP Paribas SA, France's largest bank, and a 50 percent slump at Societe Generale SA, France's No. 2 bank by market value.

SocGen, Fortis

The world's biggest financial companies, including Citigroup Inc., UBS AG and Merrill Lynch & Co., are raising about $247 billion to shore up their balance sheets after reporting $329 billion of writedowns and credit losses since the start of last year, data compiled by Bloomberg show.

Societe Generale reported a 23 percent decline in first- quarter profit to 1.1 billion euros today on increased provisions for risky loans and writedowns tied to the U.S. subprime collapse. Fortis, the biggest Belgian financial-services company, said net income in the period fell 31 percent to 808 million euros on credit markdowns.

Credit Agricole has been the hardest hit among French banks by the subprime maelstrom, and its capital increase may surpass the 5.5 billion euros Societe Generale raised in March following record losses from unauthorized trading. BNP Paribas will probably report a 35 percent drop in first-quarter profit tomorrow, a Bloomberg survey of analysts showed.

Calyon's Litzler, 48, chief executive officer of the unit since July, may be replaced by Patrick Valroff, 59, said one person with knowledge of the matter, who declined to be identified before the changes are official. Valroff heads Sofinco, the Paris-based bank's consumer credit arm.

Credit Agricole is scheduled to publish full first-quarter earnings in two days.

To contact the reporters on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net

Last Updated: May 13, 2008 11:48 EDT