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PARIS, May 8 (Reuters) - Credit Agricole has reached a deal with Italy’s Banco Popolare over their troubled consumer credit joint venture Agos Ducato involving a capital injection, the French bank said on Wednesday.
Under the deal Agos Ducato’s equity will be strengthened by around 450 million euros ($593 million), comprising a 300 million-euro share issue on a pro-rata basis and 150 million euros in subordinated loans, and a new business plan aims to help get the venture back to break-even in 2014, it said.
Credit Agricole has a 61 percent stake in Agos Ducato, while Banco Popolare controls the remaining 39 percent. Banco Popolare tried to sell its stake to Credit Agricole in 2011 but negotiations failed.
A prolonged and painful recession in Italy has driven up bad loans, forcing lenders to set aside more capital to cover non-performing debt. ($1=0.7591 euros) (Reporting by Elena Berton; Editing by Greg Mahlich)