Bank for a dime: France’s third largest bank gets rid of Greek unit for 1 euro

AFP Photo / Sakis Mitrolidis
Credit Agricole, France’s third largest bank, is exiting the Greek market after agreeing to sell Emporiki Bank to Alpha Bank for symbolic sum of just 1 euro.

­The deal marks the end of Credit Agricole’s six year investment in Greek banking, which resulted in huge losses because of the debt crisis. But getting rid of a toxic asset will cost the French major bank a pretty penny.

The French lender said its third-quarter net profit will drop 2 billion as a result of the sale, which is expected to be completed by the end of the year. This includes a loss on asset sales, a transaction cost between 300 and 400 million euro, and the cost of a new recapitalization of Emporiki, bought in 2006 for 2.2 billion euro.

Under the terms, Crédit Agricole will pour 550 million euro into Emporiki before the sale in addition to 2.3 billion euros France’s lender had to inject into Emporiki in July at the request of the Bank of Greece. It will also need to maintain a 1.4 billion euro credit line to Emporiki that the Greek bank would repay in three installments over the next two years. This credit line will be "guaranteed by quality financial assets selected by Crédit Agricole," the bank said, without providing additional details.

Earlier this year Credit Agricole saw its profit drop 67% after second quarter losses in Greece and a write-down of its stake in Italian bank Intesa Sanpaolo.

The merger of Alpha Bank and Emporiki will create Greece’s second-largest bank by loans. Alpha Bank will add 17.4 billion euros of Emporiki loans as part of the deal, and the combined entity will have about 61 billion euros of loan.

Meanwhile, other French banks are also trying to get Greek assets off their hands. Societe Generale SA, France’s second-largest bank, is engaged in exclusive talks to sell its Athens-based Geniki Bank to Greece’s Piraeus Bank SA.