Credit Agricole SA, France’s second-largest bank by assets, agreed to sell its private-equity unit to Coller Capital for an undisclosed sum to boost capital.
The sale of Credit Agricole Private Equity will reduce the lender’s risk-weighted assets by about 900 million euros ($1.2 billion), the company said in a statement today. The shares rose as much as 4.4 percent and closed up 0.07 percent to 4.04 euros in Paris trading.
“Credit Agricole SA’s decision to sell CAPE forms part of a plan to optimize capital allocation and refocus the bank’s private equity activities on local business,” the bank said in the statement.
Credit Agricole, based near Paris, follows lenders including Citigroup Inc., Lloyds Banking Group Plc, Barclays Plc and BNP Paribas SA in seeking to sell holdings in leveraged-buyout funds as banks are forced by regulators to hold more capital in reserve against their riskiest assets.
“It’s normal because these activities are very capital intensive,” said Jacques-Pascal Porta, who helps manage 500 million euros at Ofi Gestion Privee in Paris and doesn’t own Credit Agricole shares. “It’s among the first things to be cut.”
Coller, based in London, is raising a $5 billion so-called secondaries fund to buy stakes in private equity funds from investors willing to reduce their commitments. It bought about 500 million euros of stakes in buyout funds from Credit Agricole’s investment-banking unit earlier this year, three people with knowledge of the matter said in March.
The French firm said two days ago it will report a loss for 2011 and eliminate 2,350 jobs at its investment-banking and consumer-finance units as Europe’s debt crisis erodes economic growth. The company will book about 2.5 billion euros in fourth-quarter writedowns on investments, including stakes in Spain’s Bankinter SA and Banco Espirito Santo SA of Portugal.
Credit Agricole scrapped a dividend for 2011 and said it can’t confirm its 2014 goals because of “the lack of visibility on the economic and financial climate.”
In today’s statement, the lender said it expects approval for the sale to Coller in the first quarter of 2012.