April 18, 2018 / 2:22 PM / a year ago

Credit Mutuel Arkea says majority of local banks back breakup from parent group

PARIS, April 18 (Reuters) - Credit Mutuel Arkea, part of France’s fifth-biggest banking group, said 290 of its 331 local banks have voted for management to go ahead with its break-up from parent cooperative Groupe Credit Mutuel.

The vote marks another milestone in the standoff between the management of Arkea and its parent, which has reformed its organisation to meet certain rules from the European Central Bank (ECB) - a project that Arkea opposes.

Last December, Credit Mutuel Arkea lost a legal case to avoid being supervised by the ECB.

Arkea had objected to the ECB supervising it and other banks in the Credit Mutuel network through their central body Confédération nationale du Crédit mutuel.

Credit Mutuel Arkea, made up of regional banks in western and central France, as well as online bank Fortuneo, said it would now finalise a legal scheme for its plans to go independent, that would be shared with supervisors.

The legal scheme should allow Arkea, which represents about 15 percent of the group’s assets, to maintain its cooperative banking status after the breakup.

“The group will choose in consultation with its board members a new brand for its distribution networks,” Credit Mutuel Arkea added in a statement.

Arkea comprises 331 local banks, and 307 of them voted.

Yet in a separate statement, its parent company contested the results, saying the process was invalid.

The group also cited in its statement comments from the French junior minister in charge of public finances - Olivier Dussopt.

Earlier this month, Dussopt said that once Arkea had broken away from the parent group, it would lose its cooperative status and would not be able to ask for it to be renewed.

Credit ratings agency Moody’s placed Credit Mutuel Arkea’s long-term ratings on review for downgrade in January, while Standard and Poor’s revised its outlook for Arkea A/A-1 ratings to “negative”. (Reporting by Maya Nikolaeva and Matthieu Protard; Editing by Adrian Croft)

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