Credit Agricole in talks to sell Cheuvreux to Kepler

PARIS Tue Jul 17, 2012 2:43pm EDT

Passers-by walk in front of a branch of French bank Credit Agricole in Marseille, September 13, 2011. REUTERS/Jean-Paul Pelissier

Passers-by walk in front of a branch of French bank Credit Agricole in Marseille, September 13, 2011.

Credit: Reuters/Jean-Paul Pelissier

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PARIS (Reuters) - Credit Agricole (CAGR.PA) is in exclusive talks to sell its Cheuvreux brokerage unit to financial services group Kepler Capital Markets, in the French lender's latest move to shrink its investment banking business.

Credit Agricole, which has been cutting jobs in its investment bank, had been looking for a partner for Cheuvreux since Chinese group Citic Securities (600030.SS) dropped plans to buy a 20 percent stake.

Credit Agricole would be a strategic shareholder in the new group which, the companies said on Tuesday, would be Europe's leading independent brokerage.

Neither terms nor potential job cuts were disclosed. Analysts said some form of layoffs was likely.

Several major European banks have slashed their investment banks amid weak trading activity, including Italian group UniCredit (CRDI.MI) which also has a partnership with Kepler.

"I would be very surprised if nothing happens" in terms of job cuts, one Paris-based analyst said. "At the end of the day, it is a merger."

Cheuvreux employs 700 people worldwide from Boston to Tokyo.

Its sale, flagged months ago, is the latest in a series of moves by the semi-cooperative bank to scale back its investment bank which has lacked the scale to compete in key markets.

Late last year, Credit Agricole said it was exiting 21 of 55 countries where it operates and shutting businesses such as equity derivatives and commodities trading.

The agreement would be similar to one that Paris-based Kepler struck last November with UniCredit, the companies said. That deal came as the Italian bank ditched its European equities sales and trading business as part of a strategy overhaul.

UniCredit deputy general manager Jean-Pierre Mustier said on Tuesday it was open to taking a minority stake in the new venture, to be called Kepler Cheuvreux.

UniCredit will also explore an equity capital markets partnership with Credit Agricole's investment bank, he said.

(Reporting by Christian Plumb; Editing by James Regan and Dan Lalor)

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