PARIS Credit Agricole (CAGR.PA) sold a 5.2 percent stake in Spain's Bankinter (BKT.MC), continuing its strategy to refocus on domestic operations, but saw profit from the deal eclipsed by a big charge as its owners revalued their Agricole holding.
Credit Agricole is controlled by a network of French regional banks via holding company SAS Rue La Boetie. The banks have adjusted the value of their stake to account for a drop in Agricole's shares which despite recent gains are worth less than half the price of their December 2001 initial public offering.
The sale of the Bankinter stake - representing about a third of Credit Agricole's 15.1 percent holding - raised 116 million euros ($155 million). The impairment charge applied by the bank's owners totalled 160 million euros.
Agricole sold the Bankinter stake to institutional investors for 3.95 euros per share, compared to the 13.60 euros per share it paid for most of a 19.53 percent stake in 2007. However it still made a capital gain because it had already written the stake down to market value, a bank spokeswoman said.
Shares in Credit Agricole, which has for some time been pulling back from ill-fated cross-border acquisitions, rose to a new 17-month high on the news, bringing its gains to 25 percent so far this year.
"If they took a 32 million capital gain on a third of their Bankinter stake, that puts a good valuation on the remaining two thirds," one Paris-based trader said.
"The sale strengthens their strategy of refocusing on France, especially after the sale of Emporiki," he added, referring to the bank's troubled Greek unit which it agreed to sell in October for a loss of 2 billion euros.
A source close to the deal said that the biggest orders came from the UK and the U.S., with a few orders from French and Spanish funds.
The sale was the latest in a series of moves by Credit Agricole to lower its Bankinter stake, reported at 24.5 percent in the French bank's 2011 annual report. The spokeswoman said the bank had sold a block of Bankinter shares at some point last year, but declined to offer further details.
The impairment charge, announced separately, represents 25 percent of a larger 651 million-euro hit to be taken by the regional banks. It will have no impact on Credit Agricole group's solvency ratios, the bank said in a statement.
The Bankinter move, which reduces Credit Agricole's holding to 9.9 percent, will have a positive impact on the solvency ratios of both Credit Agricole SA and the Credit Agricole group, the French bank added in a separate statement.
Bankinter posted a 31 percent drop in 2012 net profit on Thursday and said that its bad loans could hit 5 percent of total loans this year, up from 4.28 percent at the end of 2012.
($1 = 0.7477 euros)
(Additional reporting by James Regan, Kylie MacLellan, Sarah White and Raoul Sachs; Editing by Sophie Walker)
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