Crédit Agricole Group set out its Group Project in 2010 with the central ambition of becoming Europe’s leading universal customer-focused bank through its retail banks and all their related activities. While pursuing this aim, the Group has adapted to its new economic and regulatory environment, marked by sovereign debt crises in Europe, a slowdown in economic growth, and more stringent requirements from regulators aimed at bringing greater stability to the banking system. To continue playing its role as the leading financier of the French economy, the Group launched a transformation project to reduce risks and strengthen financial solidity.
Faced with the liquidity crisis and growing regulatory requirements, Crédit Agricole S.A. launched an adaptation plan in 2011 with the aim of reducing debt by €50 billion and risk-weighted assets by €35 billion by the end of 2012. These objectives were quickly and successfully met, and even exceeded. The Group cut its financing needs by €68 billion and its risk-weighted assets by €57 billion, improving its solvency and liquidity ratios.
As a result, Crédit Agricole Group and Crédit Agricole S.A. will respect by 2015 the Basel 3 regulatory requirements effective from 2018. Basel 3 regulation sets a minimum common equity requirement (1) of 7% by 2019, while the markets expect at least 9% by 2013. Crédit Agricole Group will be “Basel 3 worthy” at 11% on 1 January 2014 and has committed to raising the ratio to 13% by 31 December 2015.
New business models
Three key business lines have reduced their cash consumption and risk-weighted assets: corporate and investment banking, specialised financial services, and retail banking.
The reduction was largely achieved by discontinuing some activities, withdrawing from some countries, increasing on-balance sheet deposits, and sharing the risk on loans for major deals with third-party investors.
Some business lines, including corporate and investment banking and specialised financial services, also revised their business model.
A strategic plan in 2014
Galvanised by these efforts and its stronger balance sheet, Crédit Agricole will present its medium-term plan on 20 March 2014.