WSJ: Crédit Agricole Pushes Greeks for Aid

PARIS—Crédit Agricole SA, a giant French bank facing mounting losses in Greece, said Tuesday it is redoubling efforts to get help from an unlikely source: the Greek central bank.

Crédit Agricole bought Emporiki Bank of Greece SA in 2006, part of an ill-fated strategy to expand into fast-growing markets. The acquisition saddled the French lender with billions of euros in losses and is one reason its shares have plunged more than 70% over the past year.

At Crédit Agricole’s annual meeting Tuesday, held underneath Paris’s iconic Louvre museum, a parade of shareholders yelled at executives about their Greek problems. “It’s a management mistake, you need to own up to it,” one said, drawing cheers.

In another challenge, the regional lenders that own most of Crédit Agricole are increasingly complaining to the bank’s management about the Greek losses, according to people familiar with the matter.

In its latest attempt to draw a line under the carnage, Crédit Agricole Chief Executive Jean-Paul Chifflet told shareholders Tuesday that he has renewed a request for Emporiki to be allowed to borrow from the Greek central bank’s emergency-loan program. That would help the French parent recoup some of the billions of euros it has loaned its Greek unit.

Over the past year, Crédit Agricole has lodged numerous similar requests to borrow from the Greek central bank’s so-called Emergency Liquidity Assistance, or ELA, program. Greek banks have borrowed about €54 billion under the program, making it a primary source of cash since the banks were locked out of normal funding markets. The ELA loans are attractive because the Greek central bank accepts lower-quality assets as collateral for the loans compared to what the European Central Bank accepts.

But the Bank of Greece has repeatedly rejected Crédit Agricole’s previous applications, and there is little reason to think that will change. The reason: Unlike Greece’s other cash-starved banks, Emporiki has a deep-pocketed French parent that can keep lending to its Greek subsidiary, according to people familiar with the matter.

The rejections have sparked a months-long feud between Crédit Agricole and the Bank of Greece. Executives at Crédit Agricole argue they are being discriminated against for being a foreign bank, according to other people familiar with the matter.

The CEO of France’s Société Générale SA, Frédéric Oudéa, waded into the dispute Tuesday. “I don’t see why there should be discrimination between Greek banks held by foreigners and Greek banks held by Greek interests,” he said on French radio.

In an odd twist, the governor of the Bank of Greece, George Provopoulos, was Emporiki’s CEO until shortly after Crédit Agricole bought the bank. As the dispute with Crédit Agricole escalated, some bank executives grumbled privately that Mr. Provopoulos’s history with Emporiki explains why he wouldn’t let the bank access the ELA, according to the people familiar with the matter.

A Bank of Greece official strongly denied that. The official said Mr. Provopoulos left Emporiki on good terms and that the refusal to let Emporiki borrow is based purely on its French parent’s ability to keep lending.

A Bank of Greece spokesman declined to comment Tuesday on Crédit Agricole’s latest request to tap the ELA.

Mr. Chifflet on Tuesday tried to calm investors. “I understand your worries and your distress, I am aware of the difficulties and the disappointment that this crisis situation creates,” he said. “But the current [share] price does not represent the group’s intrinsic value.”

Crédit Agricole shares climbed 4.7% Tuesday in a broad rally sparked by hopes that European leaders meeting Wednesday will soften the bite of austerity on the euro zone’s troubled economies and debate bolder, more controversial measures.

If Greece leaves the euro zone, as some experts think is increasingly likely, Crédit Agricole could face another €8 billion in losses, according to JPMorgan Cazenove analysts. As a result, “we do not feel comfortable with” Crédit Agricole’s capital levels, the analysts said.

Credit Agricole’s core Tier 1 ratio, a key gauge of its capital strength, stood at 10.9% as of March 31, above regulatory requirements.

The heads of several of the French regional banks that together own 54% of Crédit Agricole recently have been complaining to the bank’s management that they no longer want “to pay for Credit Agricole’s mistakes” in Greece and should be more involved in decision-making, according to a senior bank executive.

Nevertheless, the regional banks pledged at Tuesday’s meeting to continue supporting Crédit Agricole.

Write to David Enrich at [email protected]

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