Credit Agricole writedown raises fresh Calyon concerns

By Sudip Kar-Gupta

PARIS (Reuters) - An estimated 2.5 billion euro ($3.59 billion) writedown at French bank Credit Agricole raised fresh concerns among analysts on Friday over Agricole's risk management and investment banking arm.

"This announcement affirms previous concerns we held over risk management at Credit Agricole," investment bank Keefe, Bruyette & Woods Ltd said in a research note.

France's biggest retail bank said late on Thursday the writedown related to super-senior collateralized debt obligations and took into account a decision by ratings agency Standard & Poor's to cut to junk status the rating on bond insurer ACA Financial Guaranty Corp., a unit of ACA Capital Holdings.

Credit Agricole added that its Calyon investment bank would have "negative results" for 2007. Third-quarter group net profit already fell 16.8 percent thanks to trading losses at Calyon.

CM-CIC Securities estimated Calyon's annual loss at 400 million euros, while JP Morgan put it at 154 million.

"Doubts will remain unless the management comes up with clearer communication," CM-CIC Securities said in a research note, adding "tensions could arise" between parent and unit.

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Credit Agricole's update followed similarly weak results from Wall Street banks hit by the credit crisis, which was triggered by losses on risky U.S. mortgage loans.