Credit Agricole confident its bid for Emporiki will prevail

France’s Credit Agricole is confident its 3.1-billion-euro tender offer to buy Greece’s Emporiki Bank will be successful, the group’s chief financial officer told a Greek website yesterday. «I expect the tender offer will be successful,» Agricole’s CFO Gilles de Margerie told financial website euro2day. «If we don’t manage to gather a minimum 40 percent (of Emporiki’s shares), there is no deal,» he was quoted as saying in an interview. Credit Agricole launched the friendly offer for Emporiki, Greece’s fourth-largest lender by assets, earlier this week. Asked to comment on reports by some investment banks that Agricole was offering a price below Emporiki’s estimated fair value, the French group’s CFO said valuation was a matter for the market. «The market will show what is the fair price,» de Margerie was quoted as saying. «The real price will be shown on the table. If there is a buyer willing to acquire Emporiki at 37 euros a share, we will be enthusiastic sellers.» «But I don’t think there is (a buyer) at 37 euros, nor at 32 euros,» he said. Agricole is offering 23.5 euros a share for Emporiki. Moody’s sees good match Separately, Moody’s Investors Service affirmed the Aa2/P-1 deposit and debt ratings and the B+ bank financial strength rating of Credit Agricole SA (CASA), further to its cash offer for Emporiki Bank. CASA already has an 8.93 percent stake in Emporiki, which is publicly listed and also part owned by the Greek government and other Greek public sector entities. Moody’s said that the affirmation of CASA’s bank ratings reflects the mutualist banking group’s ability to finance the cash offer including associated good will from its own funds, while maintaining capital ratios at Credit Agricole Group that are consistent with those of Aa2/B+ rated banks. Moody’s noted that the Tier 1 ratio of CASA, which plays a central role within the Credit Agricole Group and enjoys close ties with the regional retail banks, could be under more pressure than that of the group if the announced bid for all shares is successful. However, Moody’s also pointed to the likely short-term and manageable nature of such pressure, and to both CASA and the group’s powerful earnings generation capability. In addition, Moody’s noted that the offer may not ultimately result in full ownership of Emporiki by CASA. From a business perspective, Moody’s observed that Emporiki fits very well with the French Group’s strategy to develop its retail activities internationally. The rating action takes into account the expectation that Emporiki will be turned around in due time, leveraging Credit Agricole Group’s know-how, to operate as an efficient platform distributing retail and specialized products. CASA already knows the bank well and will be able to fully develop partnerships already initiated in the areas of life insurance, asset management, and consumer finance, noted Moody’s. The higher economic and banking sector growth indicators prevailing in Greece than in the eurozone should also support the development of Emporiki, ultimately benefiting the Credit Agricole Group as well, added Moody’s. Going forward, improvements in CASA’s ratings will continue to be predicated by the successful integration and development of acquisitions, by the delivery of enhanced earnings, and by evidence of good risk management. Conversely, negative rating pressure could be derived from operational risks related to the management of serial acquisitions, from a significant erosion of the bank’s retail or corporate and investment bank franchises, and from signs of a lasting deterioration in the bank’s financial fundamentals. Moody’s will comment in a separate press release on the impact of the acquisition for Emporiki. Credit Agricole SA’s total assets rose by 29.9 perdcent to 1.06 billion euros at the end of 2005 and its net profit progressed by 42.8 percent to 3.9 billion euros.

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