Credit Agricole SA said it entered exclusive talks to sell Emporiki Bank, its unprofitable Greek unit, to Alpha Bank SA.
Credit Agricole will inject a further 550 million euros ($706 million) into Emporiki, bringing the total the French bank has contributed to 2.85 billion euros, the French lender said in a statement today. It will also buy 150 million euros of convertible bonds issued by Alpha Bank, the company added.
France?s third-largest bank is trying to sell its Greek division as concerns linger over the country?s future in the euro area. The nation, bailed out by the European Union and the International Monetary Fund, is struggling to rein in its deficit, halt a five-year recession and avoid exiting the euro currency. Emporiki?s loan book makes Credit Agricole the foreign bank with most to lose should Greece exit the euro.
?This transaction would contribute to the consolidation of the Greek banking sector as part of the restructuring and recovery of the country?s financial sector,? Credit Agricole said in today?s statement.
National Bank of Greece SA and Eurobank Ergasias SA also submitted bids for Emporiki, joining Alpha, Greece?s third- biggest lender, in their pursuit of the unit.
The French bank, founded in 1894 as a lender to farmers, invested 2.2 billion euros in 2006 to buy a majority stake in Emporiki, the least profitable of Greece?s top five banks at the time. Since then, Emporiki has been unprofitable every year except 2007, with accumulated losses for Credit Agricole of about 5.7 billion euros by the end of June.
Credit Agricole provided 2.3 billion euros in capital to Emporiki in July following a request from the Bank of Greece, Chief Executive Officer Jean-Paul Chifflet told journalists on Aug. 28. Following the capital injection, Credit Agricole?s equity investment in Emporiki was 2.7 billion euros with net funding of 2.3 billion euros, the bank, based in Montrouge, France, said Aug. 28.