Crédit Agricole, the big French bank, said Monday it had begun exclusive talks to sell its Greek unit, Emporiki, to Alpha Bank for a symbolic one euro.
Crédit Agricole, which has the largest exposure of any European lender to the troubled Greek financial sector, is trying to reduce the possible damage if Greece were to leave the euro. Alpha Bank is one of Greece’s largest banks.
Already, many of the loans Greek banks made during the days of easy credit have soured after years of financial crisis and austerity-induced recession.
An exit, which would probably be accompanied by a sharp devaluation of the new Greek currency against the euro, would further reduce the value of those loans when translated into euros.
Crédit Agricole’s gamble on Greece has been a spectacularly bad one. The bank in 2006 paid €2.2 billion, or $2.8 billion, for its stake in Emporiki, which is based in Athens, but its losses from the unit are now approaching €6 billion.
Representatives of the International Monetary Fund, the European Central Bank and the European Commission were in Athens on Monday to discuss a new austerity package as Finance Minister Yannis Stournaras presents the 2013 budget plan to Parliament.
The proposal is expected to include new measures, including tax increases and spending cuts, to reduce the 2013-2014 budget by €13.5 billion.
As part of its deal with Alpha Bank, Crédit Agricole said it would inject another €550 million into Emporiki, on top of the €2.3 billion it injected in July.
The Hellenic Financial Stability Fund, the Greek banking support agency, had made it a condition of any sale of Emporiki that the bank be recapitalized.
The French bank will also buy €150 million of convertible bonds to be issued by Alpha Bank. All told, the French bank’s funding to Emporiki would fall by €700 million.
Aurélie Marboeuf, a Credit Agricole spokeswoman, said the bank would book a loss of around €2.8 billion before taxes when the sale closes, possibly as early as the third quarter of this year.
These measures will help it reach its solvency targets for the end of 2013, she said.
Alpha Bank said in a statement that the deal would result in a €3 billion recapitalization of the combined Alpha-Emporiki and would contribute toward Alpha Bank’s own recapitalization, and that the combined group would have about 19 percent of Greek deposits and 25 percent of lending.
Alpha said it expected “substantial” synergies from the deal, including €150 million in annual cost savings from economies of scale.
© 2012 The New York Times News Service