Credit Agricole to cut 500 jobs as downturn bites
PARIS (Reuters) - Credit Agricole (CAGR.PA), France's biggest retail bank, said on Wednesday it would cut 500 jobs at Calyon, its investment banking unit that has been badly hit by the global credit crunch.
Half of the cuts will take place in France and the other half at Calyon's international operations, which include sizeable offices in London and New York. Calyon employs around 13,000 staff across 58 countries.
Agricole said the job cuts in France would be based on voluntary redundancies and "natural turnover" caused by retirements or staff moving to other parts of the company.
The credit crisis, which has shaken leading banks such as UBS (UBSN.VX) and Lehman Brothers LEH.N, caused losses at Calyon over the last three quarters. Loss-making French bank Natixis (CNAT.PA) is also expected to cut jobs in the coming months.
The Calyon cuts come follow plans by British bank HBOS HBOS.L to axe 425 jobs and by Germany's Commerzbank (CBKG.DE) to slash 9,000 jobs as part of the Dresdner Bank takeover.
"It's a sensible move by Agricole," said Banque Martin Maurel fund manager Michel Dumoulin, who holds 50,000 Agricole shares in his portfolio.
"But the problem today is not Agricole, it's the sector overall," he added.
TRIMMING BACK
Agricole shares fell 2.7 percent to 14.35 euros by 0936 GMT, with the DJ Stoxx European bank sector .SX7P down 1.7 percent.
The Calyon job cuts had been widely expected as Agricole said in May that it aimed to cut about 10 percent of costs at Calyon and devote less group capital to the business.
Agricole said it was aiming for cost savings of 300 million euros by the end of 2009. It said Calyon would close its structured credit business and parts of its derivatives activities.
By 2010, Agricole is targeting net income of 1 billion euros for Calyon, a cost-income ratio of 60 percent and a return on equity (ROE) of 14-16 percent.
In August, Agricole reported a 94 percent plunge in second quarter net profit, mainly due to a 855 million loss at Calyon.
Calyon's losses led Credit Agricole into a 5.9 billion euro rights issue earlier this year and caused the bank to announce plans for 5 billion euros worth of asset sales.
Calyon was also hit last September by a 250 million euro charge related to an unauthorized trading position at Calyon, a scandal that preceded by several months Societe Generale's (SOGN.PA) 4.9 billion euro trading loss in January.
Calyon's problems prompted the parent bank to oust Marc Litzler as head of the investment bank in May. It replaced Litzler with Patrick Valroff, formerly head of Credit Agricole's consumer finance arm Sofinco.
Based on latest prices, Agricole shares have fallen around 30 percent since the start of the year, in line with a similar decline in the DJ Stoxx European bank index.
(Editing by Louise Ireland)
