(Recast with results and details)
PARIS/MILAN May 8 France's Credit Agricole
and Italy's Banco Popolare have agreed to
inject 450 million euros ($593 million) into their consumer
credit joint venture Agos Ducato, which is struggling under a
mountain of bad debt in crisis-hit Italy.
A prolonged recession in Italy has driven up bad loans,
forcing lenders to set aside more capital to cover
Agos Ducato, 61 percent owned by Credit Agricole, is in need
of fresh capital after loan impairment charges worth 1.1 billion
euros forced it to post a 600 million euro net loss in 2012.
The joint venture with Banco Popolare, Italy's
fourth-largest bank, has been a thorn in the side for the French
bank, which already suffered from an ill-fated Greek
The capital-boosting plan for Agos Ducato envisages a
300-million-euro share issue that will be underwritten by two
banks on a pro-rata basis and 150 million euros in subordinated
Banco Popolare said in its own statement it would contribute
117 million euros to the capital increase and 10 million euros
of subordinated debt.
The two lenders also agreed on a new business plan to help
get the venture back to break-even in 2014. They hope the plan
would enhance the value of Agos Ducato by 100 million euros from
a book value of 382.4 million euros at the end of 2012.
Banco Popolare tried to sell its stake to Credit Agricole in
2011 but negotiations failed.
(Reporting by Elena Berton and Lisa Jucca; Writing by Lisa
Jucca; Editing by Greg Mahlich and James Dalgleish)