PARIS (Reuters) - Credit Agricole (CAGR.PA) has reached a deal with Italy’s Banco Popolare BAPO.MI 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.
Reporting by Elena Berton; Editing by Greg Mahlich