Credit Agricole SA is in exclusive talks to sell its trading and research unit CA Cheuvreux to Kepler Capital Markets SA and is considering a partnership with UniCredit SpA for its equity capital markets business as commissions plummet.
Credit Agricole, France’s third-biggest bank, would become a strategic shareholder of Kepler Cheuvreux under the proposed deal, the companies said in a joint statement today. Terms of the transaction, which would form the largest brokerage in France, weren’t disclosed. UniCredit and Credit Agricole are considering teaming up in advising clients on stock offerings as part of the plan.
“This is about remaining in the market but cutting back the resources employed,” said Christopher Wheeler, a London-based analyst at Mediobanca SpA. “Middle-ranking banks have to decide where they want to be.”
Credit Agricole is trimming the bank’s balance sheet and cutting costs amid higher capital demands from regulators and a decline in trading and underwriting commissions. Kepler and UniCredit have already combined brokerage operations in western Europe and some eastern European countries.
“We are responding to critical industry developments by creating an entirely new type of partnership between a broker and two banks,” Jean-Yves Hocher, chief executive of Credit Agricole’s corporate and investment bank, said in the statement.
Cheuvreux, which covers 600 stocks from 13 offices, posted a 53.9 million-euro ($66 million) loss last year, wider than its 12.5 million-euro loss in 2010. Credit Agricole’s profit dropped 75 percent in the first quarter, hurt by losses at the bank’s Greek unit, Emporiki Bank of Greece SA.
Credit Agricole had held talks with bidders including French investment firm Viel & Cie. and Jefferies Group Inc., a person familiar with the discussions said July 2.