The Greek debt crisis cost the French banks dearly

Today, only Crédit Agricole remains highly exposed to the Hélène hazard, through its subsidiary, Emporiki. Its competitors have settled the Greek file.

Highly invested in sovereign bonds of Eurozone countries, particularly present in Greece, French banks quickly worried. At the time of the assessment, the potion is bitter. But absorbable.

The Greek debt crisis, if it ends with the restructuring that concluded on Thursday 8 March in the evening, will have cost nearly 7 billion euros to the five major French groups: 3.2 billion euros to BNP Paribas, 1.3 billion to Crédit Agricole (excluding its Greek subsidiary Emporiki), 892 million to Société Générale (excluding its subsidiary Geniki), 921 million to BPCE and 359 million to Crédit Mutuel. It is a year of profits of BNP Paribas (6 billion euros in 2011). And half of the profits of the French banking sector last year (13.9 billion).

The bill has already been paid in 2011, the banks have depreciated the Greek debt more than 70%, as they had enjoined the Prudential Supervisory Authority. “Banks have had time to prepare, the exchange has been anticipated, Bruno Cavalier notes, chief economist at Oddo.Nothing to do with the messy defect of Argentina!”


It would be wrong, however, to reduce the cost of the Greek episode to this restructuring. In fact, the fear of a possible contagion to other fragile countries of the eurozone (Italy, Spain, Portugal) cost the banks a third of their stock market value, last year … Tens of billions of euros gone up in smoke. Since early January, they have found only 10% to 20% of these billions dissipated. “The contagion continues to scare the Greek debt is 5% of the total public debt of the euro area, ” says Sylvain Broyer, an economist at Natixis. Another consequence of weight, the sinking of Greece led to a tightening of banking regulations and capital requirements.

From the banks’ point of view, the Greek risk seems circumscribed. If Greece were to experience new problems of repayment, it is not the private creditors, who would be affected, but the public creditors – International Monetary Fund, European Union – now its main backers. The French banking sector has shed its titles. It does not hold more than 7.5 billion euros of Greek bonds, according to the Bank for International Settlements, provisioned more than 70%.

The fact remains that a bank is worried: Crédit Agricole, at the bottom of the 2011 results, has a subsidiary in Greece, Emporiki, and finds itself de facto trapped in the country. Emporiki has already cost him 1.1 billion euros last year, in addition to 1.3 billion related to the debt consolidation of Greece. An addition that earned its leading structure, Crédit Agricole SA, a loss of 3 billion euros in the fourth quarter of 2011, the first since its IPO in 2001! The future of Credit Agricole seems linked to its ability to get out of the Greek quagmire. Especially since its setbacks in investment banking during the subprime crisis of 2007 (which cost him 11 billion euros) weakened it.


Mobilized on the record, the two-headed management – the president Jean-Marie Sander and the general manager, Jean-Paul Chifflet – strives to stem the storm. It initiated, a year and a half ago, a recovery plan of Emporiki, based on the reduction of its refinancing needs. This refinancing was provided by Crédit Agricole. The idea for the future, says one close to the management, is to endow Emporiki with more own resources. One way would be to access refinancing at the Central Bank of Greece, an option prohibited to foreign bank subsidiaries. Another is to attract deposits to Emporiki via an offer of paid accounts.

The bank also relies on workforce reductions (already – 11% in 2011, to 5,100 employees). The fact remains that the fate of Emporiki depends on the economic situation in Greece. However, unpaid loans increased (+ 40% in 2011) as the Greeks became poorer. Credit Agricole remains under pressure, having lost half of its value on the stock market last year and regained only 10% since January.