Crédit Agricole to sell Greek bank Emporiki for €1

Crédit Agricole SA is negotiating to sell for €1 ($1.29 U.S.) its Greek bank, Emporiki - bought in 2006 for €2.2-billion - and to inject €550-million in capital in the lossmaking bank under exclusive talks with Greece's Alpha Bank.

The financing would take the form of a conversion of €550-million of its existing €2.3-billion funding into capital, and follows the €2.3-billion already injected by Crédit Agricole into Emporiki in July.

The French lender will not be required to retain a stake in Emporiki but will subscribe to €150-million in convertible bonds to be issued by Alpha Bank.

Crédit Agricole's funding line to Emporiki would fall to pro-forma €1.4-billion, if the deal is signed, down from €9.9-billion at the end of June last year. It can also expect to get a tax break for the capital injections.

Shares in Crédit Agricole rose by 4 per cent to €5.57 in lunchtime Paris trading on relief that a deal to draw a line under the bank's open-ended exposure to the eurozone's weakest economy, was finally nearing a close.

Analysts at Morgan Stanley said Crédit Agricole's outlay was lower than it had expected.

The French lender said it aimed to complete the disposal by the end of the year, ending an unsuccessful foray into Greece which has cost it €8.8bn in writedowns, capital injections and acquisition costs over the past six years.

Crédit Agricole said the sale would "contribute to the consolidation of the Greek banking sector as part of the restructuring and recovery of the country's financial sector".