MOODY'S CONFIRMS CRDIT AGRICOLE'S Aa1/B+ RATINGS FOLLOWING THE ACQUISITION OF SOFINCO
Paris, 04-16-98 -- Moody's Investors Service today confirmed the Cr‚dit Agricole Group's deposits and senior debt ratings at Aa1/Prime-1, financial strength at B+, and of its subsidiaries, following the announcement that Cr‚dit Agricole will acquire Banque Sofinco from Suez-Lyonnaise des Eaux group. Subject to due diligence work and the completion of certain legal proceedings, the acquisition should effectively take place in early 1999, when Caisse Nationale du Cr‚dit Agricole and the regional banks should jointly buy 70% of Sofinco, the remainder of the capital being acquired in early 2000.
In confirming the ratings of Cr‚dit Agricole, Moody's commented that although the total price paid for the full control of Banque Sofinco (estimated at FF 9.1 billion) includes significant goodwill, the magnitude and cost of its investment is small in relation to the overall size and scope of activities of Cr‚dit Agricole and should not materially affect its current financial fundamentals.
Sofinco is one of the largest specialized consumer finance banks in France, and has gradually grown its business and its profitability in recent years. The acquisition of Sofinco fits into Cr‚dit Agricole strategy of widening the scope of its products and services available to its customers through its large retail network. Moreover, previous to the acquisition, Cr‚dit Agricole and Sofinco already had a partnership agreement whereby Sofinco processed and managed the revolving credit cards business of Cr‚dit Agricole, which represented a substantial portion of Sofinco's total activities.
Moody's noted that consumer finance has recently enjoyed steady growth in the French domestic market, benefiting in particular from current low interest rates, aggressive marketing techniques and increased use of purchase financing by French consumers. Going forward, however, Moody's expects pressure on margins to increase as a result of more intense competition, while continuing commercial and technical investments and rigorous credit risk monitoring remain critical to achieve recurring profitability.
The following ratings were confirmed:
Caisse Nationale de Credit Agricole -- senior debt at Aa1, subordinated debt at Aa2, counterparty at Aa1, long-term deposits at Aa1, short-term deposits at Prime-1 and bank financial strength at B+;
The Aa1 rating for long-term deposits and the Prime-1 rating for the short-term deposits of the following regional banks:
Caisse R‚gionale du Cr‚dit Agricole du Nord Est
Caisse R‚gionale du Cr‚dit Agricole des C“tes d'Armor
Caisse R‚gionale du Cr‚dit Agricole du FinistŠre
Caisse R‚gionale du Cr‚dit Agricole de Toulouse et du Midi Toulousain
Caisse R‚gionale du Cr‚dit Agricole de l'IsŠre
Caisse R‚gionale du Cr‚dit Agricole de Loire Atlantique
Caisse R‚gionale du Cr‚dit Agricole de Centre Loire
Caisse R‚gionale du Cr‚dit Agricole d'Anjou Mayenne
Caisse R‚gionale du Cr‚dit Agricole du Morbihan
Caisse R‚gionale du Cr‚dit Agricole du Nord
Caisse R‚gionale du Cr‚dit Agricole du Pas de Calais
Caisse R‚gionale du Cr‚dit Agricole de Centre France
Caisse R‚gionale du Cr‚dit Agricole du Centre Est
Caisse R‚gionale du Cr‚dit Agricole de Paris Ile de France
Caisse R‚gionale du Cr‚dit Agricole de Haute Normandie
Caisse R‚gionale du Cr‚dit Agricole de la Brie
Caisse R‚gionale du Cr‚dit Agricole de la Somme
Cr‚dit Agricole Indosuez -- senior debt at Aa2, subordinated debt at Aa3, long-term bank deposits at Aa2;
Indosuez Holdings S.C.A. -- the rating for noncumulative preferred stock guaranteed by Cr‚dit Agricole Indosuez at "a1";
Cr‚dit Agricole Indosuez, Hong Kong Branch -- long-term deposits at Aa2;
Cr‚dit Agricole Indosuez North America, Inc., -- commercial paper guaranteed by Cr‚dit Agricole Indosuez at Prime-1.
The following rating remains under review for possible downgrade:
Cr‚dit Agricole Indosuez -- bank financial strength at C+.
Caisse Nationale de Cr‚dit Agricole is the clearing bank of the Cr‚dit Agricole group, the largest banking group in France with assets of FF 2,515 billion as of December 31, 1997 (approximately USD 419 billion). Banque Sofinco, headquartered in Paris, had total assets of FF 34 billion (approximately USD 5.6 billion) at December 31, 1996.
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