Credit Agricole to Unwind Part of Switch Guarantee Mechanism
January 16 2020 - 2:15AM
Dow Jones News
By Pietro Lombardi
Credit Agricole SA (ACA.FR) will unwind a regulatory arrangement
in order to simplify the bank's structure, boosting its profit but
hitting its capital position.
On March 2, France's second largest listed bank by assets will
unwind 35% of the "Switch" guarantee mechanism, under which it
transfers part of the regulatory requirements related to its
insurance operations to the regional banks of the group, paying in
return a fixed fee.
The partial dismantling of the guarantee should add roughly 58
million euros ($64.6 million) to Credit Agricole's bottom line in
2020, it said late Wednesday. It should also have a negative impact
of about 40 basis points on its core tier 1 ratio, a key measure of
capital strength.
The bank confirmed its mid-term core tier 1 capital target of
11%.
Last June, the lender said it would unwind half of the mechanism
by 2022.
Write to Pietro Lombardi at pietro.lombardi@dowjones.com
(END) Dow Jones Newswires
January 16, 2020 02:00 ET (07:00 GMT)
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