* Coller Capital agrees to buy unit for undisclosed sum
* Bank says deal to cut risk-weighted assets by 900 mln
* Shares up 1.4 pct, outperform sector
* European banks generally scrambling to unload core assets
By Lionel Laurent and Simon Meads
PARIS/LONDON, Dec 16 Credit Agricole
, is selling its private equity unit for more than 300
million euros ($390 million), a banking source close to the deal
said, as the French bank looks to cut its exposure to risky
In spite of large disposals in 2011, banks still have tens
of billions of dollars in private equity assets. That raises the
prospect of more sales as they try to shrink balance sheets.
The sale to Coller Capital, a British-based firm which
specialises in buying secondary private equity assets, will
reduce the risk-weighted assets of Credit Agricole by 900
million euros, the French bank said on Friday.
That is a fraction of the 30 billion euros in risk-weighted
assets the bank -- which this week announced its second profit
warning of the year -- has said it aims to ditch by January
"In terms of risk-weighted assets, it is peanuts compared
with Credit Agricole's total of 370 billion," said one
"But it is another sign that banks are unwinding all the
kinds of activities that were very sexy during the leverage
boom. This kind of thing takes up management time and has an
unfavourable impact under Basel III."
Private equity assets are seen as among the most risky under
Basel III regulations, making them more attractive to sell,
whether banks are well capitalised or not.
"Here in Europe, I think the scale of opportunity
for buyers is large, diverse and going to accelerate through
2012 and 2013," said Tim Jones, deputy chief investment officer
at Coller Capital.
Credit Agricole shares, down 60 percent in the last 12
months, were up 1.2 percent by 1510 GMT, outperforming the
European sector, which was 0.4 percent higher.
Credit Agricole and Coller Capital declined to provide
further details of the deal.
RACE TO THE EXIT
Many European banks invested in private equity funds
throughout the buyout boom to get a seat at the table for
financing and advising on some of the largest deals of the last
Others such Credit Agricole, under the guidance of Fabien
Prevost, chairman of the private equity group, built up teams to
invest mainly bank money and that of its insurance arm, directly
in buyouts, venture capital, infrastructure and other sectors.
Now many of those banks and insurers that invested heavily
in the sector are scrambling to unload non-core divisions as
they face tougher capital and solvency requirements.
Europe's banks still have $40 billion to $45 billion of
private equity assets to sell, estimates Thomas Liaudet, partner
at Campbell Lutyens, a firm that advises on the sale of private
Credit Agricole's larger rival BNP Paribas is
mulling a sale of its majority stake in property unit Klepierre
, financial daily Les Echos reported on Friday.
It is also considering selling a portfolio of some $700
million of private equity investments, people have said.
French insurer AXA has had its own private equity
unit -- substantially larger than Credit Agricole's -- on the
block for months now.
AXA Private Equity itself has been a large buyer of assets
from other banks, including portfolios from Barclays and
Citigroup last year, and Natixis's private equity business in
Disposals by banks accounted for 46 percent of the so-called
secondaries market in 2011, according to Campbell Lutyen's own
research, a figure Liaudet expects to be broadly similar in
"We see a significant rise in deal flow coming from
insurance companies," Liaudet added.
Credit Agricole, which expanded its global footprint through
acquisitions right up to the 2008 financial crisis, is trying to
reduce financing needs by 50 billion euros by the end of 2012.
Both it and French rivals have been hit by a liquidity
drought while they struggle to lower risk and boost their
financial strength to comply with tough new capital regulations.
On Tuesday, Credit Agricole said it would post a full-year
loss after taking 2.5 billion euros in writedowns for goodwill
and the declining values of its equity stakes in Spain's
Bankinter and Portugal's Banco Espirito Santo.
The bank, which under recently named Chief Executive
Jean-Paul Chifflet is going back to its roots after an abortive
global expansion plan, also cut 2,350 jobs in a cull of its
investment banking operations that will see it exit entire
business lines such as commodities and equity derivatives.
"More and more, the banks are now being forced to sell their
business lines, sometimes even growth units, which raises many
doubts about their future results," said Benoit Peloille, a
strategist with Natixis.