Chillin' out till it needs to be funded
Both Commerzbank and Credit Agricole, #2 & #3 from Germany and France respectively, admitted as much about their exposure to Greece reporting the 2011 figures. CA reported a EUR 3 bln loss for the latest quarter itself, Commerzbank has takken most of its losses in Greece and still has another EUR 800 mln at risk in Greece. Greece caused EUR 2.38 bln in losses for just Credit Agricole in 2011 as the bank followed SocGen and BNP in writing down Greek bonds to market value.
BNP and SocGen wrote don Greek debt by 75% of face value. Commerz bank wrote off EUR 700 mln of Greek debt but turned a profit when Dexia reported losses of EUR 11 bln and RBS, EUR 3.6 bln. The IFO Business Confidence was much better and helped markets tuck in and make a stab at staying out of recession with Corporate Profits likely to help from Europe’s global citizens
U S banks are still withdrawing loans to European Banks and Credit Agricole reaches the corner where keeping US Dollar denominated debt no longer makes sense for European players.
Credit Agricole reported 5% higher income at its French branches i,e, the bank’s retail business while investment Banking Business plunged just 27% for the year. The bank was also particularly in trouble thius year for loans to Emporiki, its Greek bank acquisition, which it has been reducing exposure to. Trader bonuses are down 20% on smaller pat. CA also owns Spain’s BankInter and Lisbon’s Espirito Santo, the three “international” operations of CA costing it 325 mln Euros in losses as another EUR 482 mln came from asset sales.
CA’s coop roots keep it higher on the ratings charts with RaboBank yet owned by a dozen Regional rural banks. Smaller Natixis reported only a 32% decline in profits.
..or as Blessing calls it, the Spanish Inquisition has sailed
Even as the bank wrote down its Greeks 74% it expects another EUR 800 mln in losses on the portfolio ( a recent buy!) after the EUR 700 mln in Greek writedowns let it get away with a EUR 4.5 bln retail Op Proft in 2011 and as RWA wound down 12%, Tier I Core remained 9.9% probably including subsidiary capital to be netted as the bank gets ready to raise the new hybrid capital specified by Basel as appropriate to include in Core Tier I and Tier II
The Bank’s CEO took a particular exception to the people at ECB not participating in the Swap as it clawed
back from a bailout to planned EUR 6 bln in Capital Gap to be bridged.
The loan losses for the bank were down to EUR 1.4 bln even as the bank claims to have reduced the EBA gap by EUR 2.2 bln ncl 400 mln increase in Capital and 1.8 bln reduction in requirement
The bank expects to reduce the Capital Gap by another 2.9 bln by June 2012 when the EBA check is due.