Credit Agricole Close Announcing PE Sale

France’s Credit Agricole will unveil a fresh round of cutbacks in investment banking, including job cuts and country exits, writes Reuters. The bank is also close to announcing the sale of its private-equity activities, writes Reuters.

(Reuters) – France’s Credit Agricole will unveil a fresh round of cutbacks in investment banking, including job cuts and country exits, as the lender ploughs ahead with a back-to-basics strategy sped up by the eurozone debt crisis.

Union sources told Reuters the bank would detail the plan on Wednesday, with the French press predicting potential job cuts of between 2,000 to 2,500. The cuts would primarily hit its investment banking unit, which employs 13,000.

“There’s a board meeting happening now, we’re still waiting for it to end,” said Regis dos Santos, head of trade union SNB.

Although no official numbers have yet been given, Dos Santos said the job cut estimates were plausible. Scenarios could include cuts of up to 1,500 jobs at the investment bank and hundreds more at leasing, consumer finance and other divisions.

Banking sources have also said the bank may exit up to 20 of the 50 countries where its corporate and investment bank is present.

A Credit Agricole spokeswoman declined to comment.

The bank is following in the footsteps of larger domestic rivals BNP Paribas and Societe Generale, which have also announced job cuts primarily in investment banking as they seek to cut debt and wean themselves off funding markets frozen by the economic slump.

Credit Agricole’s strategy under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics focus on retail banking in France and Europe, is a retreat from previous management’s ambitions of being a global player in financial markets.

The bank is deeply sensitive to ongoing turmoil in the eurozone economy, not just because it holds a substantial amount of Italian government debt but also because it owns local bank subsidiaries in crisis-wracked Greece and Italy.

Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, despite the fact that Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.

This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities.

While Credit Agricole would be open to letting Citic increase its stake in the ventures, it aims to at least keep majority control, according to a person familiar with the bank’s thinking.

The bank’s shares were down 1.5 percent, to 4.46 euros, at 0945 GMT, underperforming a 0.6 percent fall for the European bank sector. Its stock price has fallen 52.4 percent year-to-date, worse than a 34.2 percent drop in the sector.