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Crédit Agricole suffers in tough conditions

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  • Crédit Agricole suffers in tough conditions

FRANCE - Crédit Agricole Group confirmed it is shaking up its Calyon operation on the back of announcing writedowns related to bond protection while its investment management division saw its assets under management fall by over €7bn in the first half of this year.

Details of Crédit Agricole's first half results for 2008 reveal the group generated net income of €968m but this was dragged substantially by its corporate and investment banking division, Calyon, as it lost €1.339bn through exposure to monolines, the insurance bond issuers buy to protect against defaults.

The group set out in July the Calyon operation would be divided into four components: coverage and investment banking, structured finance, equity brokerage and derivatives, and fixed income markets, but the latest losses means a refocusing plan will attract close scrutiny when presented on 10 September.

Looking elsewhere, total assets under management within the asset management, insurance and private banking operations are said to have fallen a "modest" 4.9% to €584.4bn, "induced by the decline in equity markets, an unfavourable currency impact and the outflows in asset management".

Those net outflows from Crédit Agricole Asset Management amounted to €7.4bn - 1.4% of its AuM - as the division saw its assets fall 6.7% in the first six months of this year to €489.7bn.

The total outflows at CAAM were limited somewhat, according to the H1 results, "owing to record inflows into money market funds and structured funds, which offset most of the decline in absolute performance VaR products and equity products.

Despite news of problems within both its investment banking and asset management arms, the firm still has a healthy Tier 1 solvency ratio of 8.9%  and a core Tier 1 ratio of 6.5% thanks to its €5.9 billion capital raising through institutional investors and retail shareholders in June.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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