Greece could cost Credit Agricole 850 million euros

French bank Credit Agricole said an expected loss at its Emporiki unit and its participation in the EU Greek rescue plan, would force it to take a second-quarter provision of up to 850 million euros ($1.22 billion).

For France’s third-largest bank, which is majority owned by a network of cooperative regional banks, the Greek crisis is the latest in a series of recent missteps, which also saw a disastrous foray into investment banking.

Credit Agricole said on Thursday it still expects to turn a second-quarter profit.

The bank had been expected to post net income of 861.67 million euros when it reports earnings at the end of August, according to analysts polled by Thomson Reuters I/B/E/S before the provision was announced.

The bank earlier this month said it was replacing Bertrand Badre as chief financial officer, which some analysts speculated may have been related to the worsening Greece numbers.

“When the CFO left, a lot of people were expecting that part of the reason had to do with Emporiki,» said Mediobanca analyst Alain Tchibozo, adding that the former finance chief had been known for his optimistic forecasts on the Greek unit.

Credit Agricole’s Greek Emporiki Bank unit will post a 451 million euro second-quarter loss in the quarter and said the worsening climate would make its goal of breaking even by the end of 2012 «more difficult.»

The Greek bank is also taking a 71 million euro impairment for its Greek sovereign bond portfolio.

Credit Agricole also said it had decided to take a 359 million-euro writedown for the remainder of the unit’s acquisition cost.

“Of course it will have an impact on the stock,» Tchibozo added. «A lot of people knew they were in trouble but those who did not will sell the stock.»

Credit Agricole shares are down 7.1 percent so far this year, outperforming the European banking sector, which has lost nearly 11 percent.

Earlier on Thursday, French Finance Minister Francois Baroin said French banks and insurers would propose to their boards that all of the Greek debt they held maturing by 2020, worth about 15 billion euros, would be involved in the rescue effort.

Larger French banks BNP Paribas and Societe Generale, are set to report earnings next week and are likely to quantify their exposure to the Greek bailout agreed last week.

BNP Paribas is the biggest holder of Greek debt outside Greece with exposure of 4.5 billion euros to Greek bonds on its banking book.