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Credit Agricole plan helps boost shares

Wednesday, February 17, 2016 - 01:34

European stock markets resumed their recovery on Wednesday, boosted by a rise in the shares of Credit Agricole. Hayley Platt reports on how the French bank is beating expectations - and not just with its results.

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A good set of results, and plans to simplify its ownership structure. Credit Agricole possibly put a smile on some investors' faces today- with its expectation-beating results sending shares up more than 7 per cent. London Capital Group's Ipek Ozkardeskaya says the reforms are good for investors. (SOUNDBITE) (English), LCG, MARKET ANALYST, IPEK OZKARDESKAYA, SAYING: "The strategy will increase the Tier 1 ratio to 11 per cent and will allow the bank to provide all cash dividends so it has been positive for investors because we are talking about stable returns, simplification of the structure and financial stability and and more transparency is something that investors like." It's to sell back its 25 percent stake to its parent banks for 18 billion euros to free up capital. But will the changes be enough to win back investors long term? (SOUNDBITE) (English), LCG, MARKET ANALYST, IPEK OZKARDESKAYA, SAYING: "The bank should give itself the chance and the room to make these changes in a very transparent configuration so that investors will be convinced to come back onboard." The Paris-based lender announced its restructuring plan as it reported a fourth-quarter rise in net income of 27 percent for the year. The bank's chief said it expects to be able to generate a return on equity over the next three years of at least 10 percent. And pay a cash dividend in 2016 equal to 50 percent of earnings. That's despite a tough environment - shares in euro zone banks have fallen nearly 30 percent since the start of the year.

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Credit Agricole plan helps boost shares

Wednesday, February 17, 2016 - 01:34