Credit Agricole Said to Weigh $2.4 Billion Saudi Stake Sale

Updated on
  • Lender considering sale of 31% stake in Banque Saudi Fransi
  • French bank working with advisers to find potential buyers

A visitor walks towards the Credit Agricole SA headquarter offices in Montrouge, near Paris, France.

Photographer: Christophe Morin/Bloomberg

Credit Agricole SA, France’s third-largest bank by market value, is considering a sale of its 31 percent stake in Saudi Arabian lender Banque Saudi Fransi, in a deal that could potentially fetch about $2.4 billion, according to people familiar with the matter. The shares fell on concern a disposal may hit operating profit.

The bank is speaking to advisers to find buyers, the people said, asking not to be identified as the information is private. The stake may attract both international and regional lenders who are seeking an entry into the kingdom, one person said. A formal process hasn’t started and the bank may still decide against the sale, the people said.

Representatives for Credit Agricole and Riyadh-based Saudi Fransi declined to comment.

Philippe Brassac

Photographer: Chris Ratcliffe/Bloomberg

Credit Agricole has been cutting costs and refocusing on its main markets to propel growth. Chief Executive Officer Philippe Brassac last year completed a $19.6 billion deal to sell holdings in more than three dozen regional lenders, simplifying the structure and raising capital buffers.

A sale of Banque Saudi Fransi would come “at the heavy cost” of an 8 percent dilution in operating profit, analysts Jean-Pierre Lambert and Pedro Yaguez-Bovio at Keefe, Bruyette & Woods Ltd. wrote in a note. Because the bank “is no longer short of capital, there is no specific need for disposals at this point, particularly of profitable entities with strategic connections.”

Credit Agricole fell 1.4 percent to 11.90 euros at 10:08 a.m. in Paris, curbing gains this year to 1 percent. Banque Saudi Fransi rose 0.2 percent. The stock has fallen 7.2 percent this year.

Profit Slump

International banks have been selling Middle East businesses to raise capital and focus on home markets. Barclays Plc agreed to sell its Egyptian business to Morocco’s Attijariwafa Bank last year, while Royal Bank of Scotland Group Plc is working with Credit Suisse Group AG to sell its 40 percent stake in Saudi Arabia’s Alawwal Bank, Reuters reported in November.

Societe Generale SA sold its Egypt unit to Qatar National Bank SAQ in 2012 and BNP Paribas SA sold its business in the country to Dubai-based Emirates NBD PJSC.

Banque Saudi Fransi’s 29 billion-riyal ($7.7 billion) market value makes it the nation’s fifth-largest bank, according to data compiled by Bloomberg. The company, which has assets of 203 billion riyals, reported fourth-quarter profit that slumped 61 percent due to higher impairments for credit losses.

— With assistance by Ruth David, and Geraldine Amiel

(Updates with analysts’ comment in fifth paragraph, share reaction in sixth.)
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