BREAKING….Credit Agricole “will be Hollande’s first challenge” say sources.

Investors may be about to panic as CA price continues to fall

Tuesday’s confirmation of yesterday’s Zero Hedge rumour (that Spain is embarking on a bailout of its banking system) must be making the residents of Berlin-sur-Brussels wonder what on Earth might happen next. But it’s looking increasingly like the Next Big Thing could be a French bank failure.

The Slog has been investigating the case of Credit Agricole over the last three weeks. (It just happens to be my bank in France, and it also happens to be holding quite a lot of my folding at the minute…. so this was a personal as well as professional  concern).

Yesterday’s 6% fall in CreditAg shares didn’t come entirely as a surprise here in Slogger’s Roost. While all the French majors slid on fears of a bank-taxing socialist in the Elysees Palace, my bank positively slumped. Why?

“I would’ve thought it was obvious,” says The Slog’s Bankfurt Maulwurf, emerging at last after some three weeks in hiding, “It’s exposure to the Greek banking disaster is enormous”.

He’s not wrong. Even EU Commissioner in permanent Athenian Residence Horst Reichenbach admitted at the weekend that “the banking credit sector here gives cause for concern”.  And this is where we must be precise about the problem CreditAg faces: its exposure to Greek sovereign debt has been substantially reduced (with help from Mario ‘Paper’ Draghi) but not its involvement in Greek banking by ownership.

The Greek insitution concerned is Emporiki Bank. In 2011 alone it cost Credit Agricole around €1bn in write-offs. And while the French bank’s exposure to Greek sovereign debt is now neutral, it’s commitment to Emporiki is anything but.

“In the last month,” says a trusted source in Madrid, “I have seen figures showing that 84% of Credit Agricole’s Greek exposure is to Emporiki alone. We are talking in the region of  €20 billion here – over six times more than any other French bank. Without a doubt, this is going to be Francois Holland’s first big test”.

While Mario Draghi’s alleged recapitalisation of Greek banking is under way, there is no sign or indeed proof that any of this has gone to address a problem of loans outstripping deposits at Emporiki by two to one.

“If the French banking collapse is going to start anywhere,” suggests a Greece-savvy source in Deutsche Bank, “then it will be at Credit Agricole. While the Emporiki deposit base was upped after the March bailout, the loans position is getting worse and worse.”

Oops. Anyway, a quick look at the CA share price shows it doen further to €3.54 at 13.40 GMT…and selling volumes have accelerated considerably in the last two hours.

We may be on the verge of an event. Meanwhile, the entire Spanish caja sector is in a serious mess.

Spain finally announced today that it is planning a state bail-out of Bankia, the country’s third biggest banking institution, a move certain to involve billions of euros of taxpayer money being chucked at yet another wobbly wall.

Rodrigo Rato, Bankia’s executive chairman and a former International Monetary Fund managing director, resigned from the bank formed two years ago from a merger of seven Spanish savings banks – the cajas – wherein most of the property balloon junk resides.

It just goes to show: that reliable ol’ IMF quality always comes out in the end. I wonder what Frufru Lagarde will do when her time is up? Yesterday, she confused potential future employers still further by telling an audience in Zurich that the growth-vs-austerity fight is a “false debate”. The IMF’s current Managing Director urged some flexibility for eurozone countries having trouble meeting fiscal targets. Did this include Greece, people wondered? No, she agreed – it didn’t.

Lest we forget, Lagarde’s largesse and false confidence about French spending and banking during 2010 were  suddenly outed when French banks were discovered to have invested in over 47,000 tartan-paint factories in and around Athens. Then on joining the IMF, she reversed her description of French and German banks as “rock solid” by running around the EU telling banks to recapitalise with all haste. More recently she has diversified into the bazooka-leveraging space, a sector in which it is enough to say you have paper commitments for $300bn in order to walk around threatening to dispense $600bn of the real thing.

There’s a whelk stall at Borough Market looking a bit down on its luck. Christine might be just the crustacean they need.


66 thoughts on “BREAKING….Credit Agricole “will be Hollande’s first challenge” say sources.

  1. I used to bank with Credit Agricole when I lived for a while in the historic little town of Senlis, just north of Paris. The CA bank manager was blonde, rather beautiful and smoked Gauloise at her desk. Such a refreshing change from the ugly fellow at RBS.

  2. So, John, could you perhaps tell us what you are going to do with your folding stuff sitting in Cred Ag? I ask for selfish reasons, as all my money comes into the SocGen and you are making me feel nervous.
    Is there any ‘cover’ as in GB for bank deposits up to some 85,000 pounds?
    I bet there isnt.

  3. I parted brass rags with Credit Agricole years ago on discovering that shares I had bought were being held in their name…not mine.
    I had to find this out for myself via the shares registry as C.A. refused to discuss the matter as it was ‘confidential’.
    I then confided my money to La Banque Postale.

  4. I’m with CA too!! The only reason being is they charge less than other banks in France – I keep nothing more than opertating costs there though of corse. As soon as a I recieve my salary I withdraw it and convert what I’m not going to spend that month out of euros…

  5. Don’t forget the Greeks have NOT recapitalized… from the 25 of 50 Billion they received in late April, they applied 18 Billion (supposedly) through the Greek Emergency fund as “bridge” funds til after the formation of a new government… I believe the other 7 Billion is being saved for the almost 10 Billion in maturations/payments due in May alone… when (not if) Greece reapplies the funds to making these payments that will leave the banks in complete freefall, and as you show that pretty much means France is F’ed as well. If Tsipras forms a government it will be commies, and left wing BS artists that have never balanced a checkbook much less run an economy… he has announced today he would immediately nationalize all banks, among other great ideas… take your pick Greece, France, Spain seems like a few “events” there… is that the smell of fresh Eurobonds cooking?

  6. Look, clearly substantial players in the European banking system,in Spain,Greece and France,have not just a liquidity problem, but an underlying solvency issue,caused by reckless expansion in balance sheet terms,and over optimistic property lending.These institutions must be crying out for advice from an independent third party,from another country,with unrivalled experience in these matters,and someone able to take in the big picture,and,if necessary author a plan .The requirement, here,is not just the input from a failed central banker,rather the unique insights from somebody who truly believed he had saved the world,as seen from years of political experience.I have it on good account that the entire Clubmed banking system,and indeed the future of the Euro,could be guaranteed by the advice of a little known PhD student,from an obscure Scottish university,whose 10 year thesis on the history of Scottish trade unions preceded an unusual career path,which at present is leaving him largely unemployed.

  7. yeh, I’m seriously thinking of leaving france at the moment; even though its a beautiful country, I’m so disgusted by the outlook people have here – at least in the uk we have cynicism and pessimism about the great economic and political shitstorm. I do think France will be unveiled as an honorery piig over the comming months, with the uk to follow over the coming (1.5-3) years….where is one to go?

  8. If Credit Agricole does go down what sort of ripple effect will this have? I’m thinking particularly of Portugal..Around where we own a property (Lourinha) there is a C.A.that is particularly popular with the farming community; agriculture is a major contributor to the local economy. Or are they as independent as I was informed by the lady in Barclays they are from their branch in Peniche when I asked in Reigate if they could assist in opening an account; a “Diamond” response you might say..

  9. Mr Maxi

    At my age no one will have me so I am stuck with what I’ve got, but I would suggest anywhere bar Europe. As to PIGS – or honorary ones – it really is anyone’s guess as to which of the 27 will be the detonator. I think that it will be either Greece or Spain, but you can never discount a curved ball from the far outfield. Interesting times indeed.


  10. william

    Nah; he’s already saved the world once, so it is someone else’s turn this time.


  11. Gordon would ask all of the Greek creditors to invoice Greece immediately and demand their dues. Greece would print off all of the money that it owes or send it electronically as required. Once this is completed then Greece would leave the EU, switch to the drachma and start out again as a debt free, independent country.

  12. Yes, there is cover, by the french state, I believe it to be between 80,000 – 100,000 euros, but as with all things governmental, getting your money back will be “pas pour demain!”

  13. Is this not more about politics? The voters being punished for voting the wrong way. These finacial products are created and designed for this very thing/reason, taking down anyone or anything that is a threat to them. Vote the wrong way a you will smashed by these corrupt psychotic kleptomaniacs. That’s my take on this.

  14. no, Its more about economics – If voters stamp their feet and demand more profligacy then the market prices that accordingly

  15. Chang Mai in northern Thailand has a large expat community driving a cheap but pretty high quality private health industry.

  16. Out of interest, has anybody seen this for Seeking Alfa?
    Government generates first surplus since 2008. The federal government ran its first surplus in four years in April with a positive balance of $58B, or a $98B turnaround from a year ago. For the first seven months of the fiscal year beginning on October 1, the deficit tallied $721B, or $149B less than a year ago. Receipts were up 6% on year, but still $20B less than the CBO projection.

  17. I can not believe anyone here, and that included John would have their money in any of the big banks. Apart from keeping your money there is helping to prop this corrupt system up, when they do collapse, if anyone thinks the govt will give them their money back their nuts. There will be bank holidays and when they open again what you have will be devalued by 50%. Leave only what you need at the bank to cover short term costs and put the rest in safer assets – that you have access to.

  18. “safer assets – that you have access to” ……as in ‘under the mattress’?
    Surely once everything starts to topple, all paper money will be worthless?

  19. Thanks for that info, Mo. As to the ‘getting your money back’ part, I dont doubt that it would be the same with the UK garuantee…..

  20. You are both so right….. back to the veggie garden, and encouraging the chickens to produce chicks!

  21. Why would anyone own shares in a European bank, and why hasn’t the value of the Euro fallen vs other currency’s at a faster rate?

    Are these investors watching the same movie as the rest of us? I guess the risk on/ risk off crowd is waiting for someone to yell very loudly RISK OFF!

  22. @Bellevue: All *EU* member states have a bank deposit guarantee of €100,000 or equivalent (£85,000 in the UK), subject to the usual rules of per person, per bank licence etc.

  23. @In the land of moral decay:
    And a very nice place it is too :-) But immigration into Thailand is not easy-peasy for Europeans, save marrying a Thai lady ;-)

  24. The Silver Witch might do well selling antiques at Camden Market, but seriously, this is what happens when you put politicians in charge of things like the IMF.

  25. BV
    I first started getting suspicious when my local mgr kept ringing up to say “Don’t worry”. Seriously, I am genuinely considering taking the cash out, but I think you’ll find ALL French majors are guaranteed by the State…so France has to go bust before we do
    I Think we have some time yet.

  26. Yeahbut … take into account the time it might take to recover your money from the French State if CA goes down. There’ll be vast numbers of other people submitting claims for compensation.

  27. Trickcyclist
    I don’t save with them…I have money to pay a bill going THROUGH them – so to speak. In France the law is that any etranger with a property MUST have a bank acct.

  28. Now just fancy that, he hasn’t taken his Presidential oath and certain elements are riled with him already:

    “All of Gaul is happy with Hollande?


    Many French people are saying out loud, “Hollande is not my President”

    PARIS – Today, the Bloc Identitaire launched a poster campaign, “Hollande is not my President” – the posters elucidate this with the following reasons: “Voting rights for non-European foreigners, regularisation of illegal immigrants, gay marriage and adoptations by homosexuals are his political programme”

    The Bloc Identitaire delivered the following declaration:

    ‘The socialist Francois Hollande was elected as President of the Republic with 51% of the votes cast by the “French”.

    Quotation marks are necessary because 49% of votes for his opponent, 7% blank and invalid votes, 19% vote abstention and 15% non-registered voters mean that, in fact, only 32% of the French of voting age have opted for this candidate.

    Quotation marks are necessary because, just as in the first round, ethnic voices very strongly in favour of Francois Hollande have spoken out. In both his programme and in the course of his campaign, he has always presented himself as a candidate of the immigrants. The left-right split, which had already shown itself as largely obsolete in the economic field, has now been definitively replaced by the identity-question.

    Francois Hollande was elected basically because of the huge disappointment with the outgoing president, not because the majority in France were impressed with his ideas or his campaign. It is therefore legitimate when many French people say, as we say, “Hollande is not my president.”

    Sound like he would fit in well with our team of red-socks!

  29. Does it matter ?
    The bankers have already proved they will steal
    anything not nailed down.Forget boundaries,segregated
    accounts,whatever.The only sage place now is PMs, or
    the bank of mattress.If the banks don’t steal it the Govt.

  30. BT Not correct. Most SE asian countries have retirement visas that allow you to live there tax free but not work in paid employment in the local economy.Canstart a busigh or be a consultant. THailand, Mala6sia, vietnam and the Phils all have programmes. The phils is oldest, almost 30 years and there are over 1 million foreign retirees here. I heardtonight of one London Stock Exvhange company owner living here in a resort who is worth over £100 mil who flies his board out here for the board meetings. He is restricted to 90 days a year max in the UK.

  31. When I applied for my mortgage, I was faced with a twenty-something male functionary that did not understand what Forex was. I mean, seriously, is this the level of staff competence throughout? I hope not…

  32. Much appreciated. Ooh what a choice of words. :)

    Love to hear JW’s thoughts on the Euro now. Why can’t zero hedge get it’s html fixed up so that Mac browsers can magnify the page without making the columns progressively narrower as the text size increases? Maybe I could go back to working in software just to take my mind off these markets.

  33. Pingback: Breaking: French Bank Credit Agricole Falters-- 'Will be Hollande’s First Challenge' Say Sources

  34. @OAH: Thanks. I looked at Thailand-living (I really love the place) a while back and read a few forum debates. But it’s possible the people debating were younger and not retirees. Do you have a link to anywhere useful on that……….?

  35. The prudent thing to do is to get, everything, the flock, out of CA tomorrow…

    That sucker’s going down.

  36. I remember one of Blair’s election “wins”. When I did similar calculations I worked out that he’d been elected by only about 19% of the potential voting population. And that didn’t include assorted immigrants given the vote by his corrupt party. He claimed a mandate to govern.

  37. 47. Barclays Group
    (United Kingdom)

    48. Crédit Agricole

    50. Banco Santander

    Now that is comforting.

  38. agree with BT, and also consider the value of what the euros might be by that time. I don’t see why anyone has more than just operating costs in a bank – especially europes most bankrupt….tread carefully

  39. Used to bank with CA, terrible, beyond words. I now bank with ING and Boursorama, both excellent. I would just love to see CA fall off a cliff, that might be enough to take that terrible ferry company Brittany Ferries with them too.
    I can confirm that 100k is underwritten by the French government, for a joint account this rises to 200k.

  40. @lupusincomitatus Iceland? ICELAND? – retire to Iceland? I worked there, I still work for them now and again. Retire to Iceland LOL Bored stiff, no sun, no warmth :( Nice people :)

  41. Hmmmm…….that would be a list based on the rankings of the ratings agencies. The same agencies which rated Lehman AAA two weeks before it fell over. I am not sure I would be so confident about some of those German banks near the top…..except for the resources of the German state which can pick them up if they fall over.
    Truth is it is impossible to know, there are whispers in the markets, but essentially the accounts of all modern western banks are a black box, the contents of which are known only by insiders. That is one of the fundamental problems about which something must be done.

  42. Credit Agricole sponsored a pretty good cycling team back in the day. One of the few clean teams too!

  43. Pingback: EUROBLOWN: Troika cancels Athens visit as Greece heads for second election. | A diary of deception and distortion

  44. Quick word to the wise.
    It’s = it is
    Its = possessive of it

    Sorry, but it’s just irritating.

  45. In North of France, some people have started to go to Belgium to buy some gold -some oz as ingots are very expensive. Gold price has utterly increased but in case of a massive devaluation it will be worth it.
    Better to buy gold in a foreign country as gold bought in France would be charged with taxes. Doing this way it is “ni vu ni connu”
    Some jewels with platinium and very good quality diamonds might be a good idea too. What do you reckon?

  46. Just spent 2 interesting weeks in France where I lived for 30+ years. What is striking is the “hope over experience” syndrome, particularly among the under 35’s. They actually neither comprehend nor have any desire to understand anything that knocks the sacred “euro” and the “European project”. Indeed, anyone even talking about such ideas and arguing against, is looked at with almost pity, and coming from an Englishman is akin to an insult. Dear me, the pill is going to be bitter. President Hollande-Flamby has no chance, not even a glimmer. He may last the statutory five year mandate, but in what order will he leave La Belle France in 2017? In ruins would be my bet…(that is more than the ruins existant).
    PIIGS should definitely include France.

  47. Pingback: CREDITAG RESULTS DROP 75% AS A BILLION WRITTEN OFF IN GREECE | A diary of deception and distortion

  48. Pingback: John Ward – Creditag Results Drop 75% AS A Billion Written OFF In Greece – 11 May 2012 | Lucas 2012 Infos

  49. Je suis franchement décue.J’ai elu François Hollande pour président seulement parce que j’ai vraiment cru au changement tel qu’il était exposé et à la conception d’un gouvernement irréprochable. Comme je suis déçue de constater que François Hollande nomme en 1er ministre Jean Marc Ayrault, qui est tout sauf irréprochable ! Ce monsieur a tout de même était l’objet d’une condamnation à de la prison pour fait de favoritisme ! Grande déception !!!.

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