Adjustments to prepare for the future
The European sovereign debt crisis, slowing economic growth, intensifying regulatory requirements to increase the stability of the banking system… The economic and financial climate in which Crédit Agricole Group operates toughened. To continue to play its role as the leader in financing to the French economy, the Group undertook major transformation efforts, which are starting to bear fruit.
A well-managed adjustment plan
In response to the liquidity crisis and the new regulatory requirements, Crédit Agricole S.A.
adopted an adjustment plan targeting reductions in debt of 50 billion euros and in risk-weighted assets of 35 billion euros by end-2012. This plan was rapidly implemented and it exceeded these targets. The Group reduced its funding requirements by 68 billion euros and its riskweighted assets by 57 billion euros, thereby improving its solvency and liquidity ratios. The Basel 3 rules set the minimum Core Tier 1 ratio(1) at 7% by 2019, and the markets are expecting at least 9% in 2013. Crédit Agricole Group’s fullyloaded Basel 3 Core Tier 1 ratio was 9.3%(2) at 31 December 2012 and the Group is committed to lifting it to above 10% at end-2013.
New business models
Three business lines reduced their liquidity consumption and risk-weighted assets: Corporate
and investment banking (by 33 billion euros and 51 billion euros, respectively), Specialised financial services (by 13 billion euros and 6 billion euros) and French retail banking (22 billion euro increase in customer assets). Most of the reduction was due to the discontinuation of certain business activities, withdrawal from certain countries, an increase in on-balance sheet deposits and sharing the risk on loans for major deals with third-party investors. It was achieved while maintaining maximum support to the French economy and facilitated by a fall in demand for credit. Some business lines, including Corporate and investment banking and Specialised financial services, also revised their business model. Dedicated to serving its customers and the economy, Crédit Agricole Group set the stage for its rebound and reaffirmed its ambition to become a European leader in universal customer-focused banking.
(1) Ordinary shares, mutual shares, retained earnings.
(2) Pro forma post disposal of Emporiki.