No stake expansion yet

The prevailing upheaval in foreign markets has forced French bank Credit Agricole to revise its short-term strategy and caused it to forgo its first option to acquire a 9.9 percent stake in Greece’s Emporiki Bank (formerly Commercial Bank). Credit Agricole, which already owns a nearly 7 percent stake in the Greek bank, has already informed Emporiki’s management and the Economy and Finance Ministry that it will not exercise the option for an additional stake before it has finished with the merger of another French bank, Credit Lyonnais. Credit Agricole was to buy that stake from the Greek State, which, in turn, acquired it from state-owned Postal Savings Bank. It is not clear whether Credit Agricole will finally opt to exercise its option following the merger with Credit Lyonnais. Should it choose not to, it would be a blow for Emporiki. A recent report by international credit rating agency Standard & Poor’s said that an increase in Credit Agricole’s stake in Emporiki would enormously benefit the latter’s credit rating, especially if it were accompanied by a cash infusion into the bank. Currently standing at BBB-, a rating left unchanged in S&P’s latest round of credit revisions, Emporiki’s credit rating is lower than that of the big Greek banks, that is, National Bank of Greece, Alpha Bank and EFG Eurobank Ergasias. In any case, S&P had rated Emporiki’s prospects as «good» and did not exclude a credit upgrade, even without Credit Agricole’s exercising its stake. S&P added in its report that Emporiki has an adequate capital base despite an increase in bad debts. It adds that a better management of credit risk by Emporiki Bank could result in its credit rating being upgraded.