LONDON (ShareCast) – French bank Credit Agricole (Milan: ACA.MI – news) is preparing to change its financing model for its investment and corporate bank, announced general director Jean-Yves Locher, the Financial Times reports. “We will be slimmer, operating in a smaller network of countries and a business model focused on the financing business,” he explained. The new model is expected to be ready by the end of the year. “And we are very much focused on debt capital markets because our customers need more and more to issue bonds,” Locher added. Shares were down 3.65% at €5.13 by 12:14 in Paris. S.B.
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2012年2月6日星期一
2012年1月2日星期一
Credit Agricole quits commodity trade as crisis bites
(Reuters) – Credit Agricole will stop trading commodities and will also slash its financing of the multi-billion-dollar market, the most sweeping commodity cuts yet among European banks strained by the euro zone crisis.
Credit Agricole, the formerly farm-focused bank that had boosted its energy trading in recent years, warned on Wednesday of losses and write-downs as it struggles to cope with the credit crunch. The cuts come just weeks after rival Societe Generaleshut down its year-old U.S. gas and power trading desk, and leader BNP Paribas consolidated.
The deepening euro zone debt crisis has hit French banks hard as traditional sources of dollar funding have evaporated and as they face pressure to meet tougher capital requirements.
Volatile commodity prices, dimmer growth prospects and tougher regulation are also forcing some firms to question the outlook for the decade-long boom in trading raw materials.
Cargill Inc., which has voiced a bleaker economic outlook for next year than most of its peers, is cutting 125 jobs worldwide from its energy, transportation and metals operations as part of plans to reduce 2,000 or 1.4 percent of its global workforce over the next six months.
Trade sources said more companies may follow.
“What is happening with Credit Agricole is certainly a major trend across banking where the entire commodities trading business is shrinking,” said a senior commodities trader who recently left a major bank for an independent trading house.
“It is happening because of regulations, as proprietary trading is not allowed any more and because people have overspeculated in the past years and got badly burnt.”
Credit Agricole’s commodities trading employs around 100 staff globally, including traders, analysts, marketing teams and technical staff, sources close to Credit Agricole said.
A source in the bank said many employees had only learned of the closure of the commodities trading unit on Wednesday:
“It has all happened very quickly. It is a shock.”
CREDIT PRESSURE
On Wednesday, Credit Agricole Chief Executive Jean-Paul Chifflet said the bank was pulling out of commodities because it had less expertise in the field than other core areas:
“We preferred to stop it completely and devote our energy to other activities,” he said.
But Chifflet told Les Echos newspaper the bank would not sell its holding in Newedge, a commodities futures and clearing brokerage it co-owns with Societe Generale.
Last year, the head of Credit Agricole’s commodities trading division, Martin Fraenkel, told Reuters energy was a key growth area because “clients of the bank have ever more need for hedging services in these markets”. The bank had just secured a potentially potent tie-up with power trading giant ETF Trading.
But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
“The major players – Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank – are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down.”
Morgan Stanley said on Wednesday it would cut 1,600 employees in the first quarter; it did not say how many, if any, would be in its commodities division, which ranks with Goldman Sachs and JP Morgan as one of the three largest in the world.
A senior oil trader at a major European bank said only very large players could now survive in commodities: “They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals.”
Credit Agricole, which has expanded from its agricultural origins in recent years, said on Wednesday it would cut 2,350 jobs and exit 21 of the 55 countries where it operates and shutter entire businesses including equity derivatives.
BNP Paribas, Europe’s trade finance leader in commodities, has been cutting its trade finance portfolio, drastically reducing exposure to small and medium sized oil and metals firms and reselling part of that exposure, bankers say. A spokeswoman declined to comment.
In November, traders said the bank would close its Houston energy trading office and move some of the team to New York. It has also lost a senior metals trader.
Last week, Societe Generaletold employees it would shut down its Stamford, Connecticut-based physical gas and power operation and lay off most of the 140 or so employees at the trading unit it bought less than a year earlier from RBS Sempra.
“VERY, VERY STRONG REDUCTION”
Many details of the changes only emerged on Thursday.
The bank’s commodities derivatives business, trading oil, gas, metals and softs, is based in London and Hong Kong. It also has market representatives in Tokyo, Singapore and New York.
Credit Agricole has been active in oil hedging, traders said, and does not have a reputation for taking on major risk.
“It was very flow-based, rather than proprietary,” said a London-based trader with a bank. He said the bank hedged oil positions for airlines, taking positions on over-the-counter jet fuel derivatives and gas oil on the IntercontinentalExchange.
Sources close to Credit Agricole say the bank also plans to cut dramatically its commodities trade financing, which involve commitments of tens of billions of euros, but the exact scale of the retrenchment was unclear.
“In terms of commodities financing, they plan a very, very strong reduction in their activities,” a source close to Credit Agricole said, adding the full array of short-term and longer-term letters of credit and export credit would be affected.
The bank’s Geneva-based trade finance activities have about 120 people spread around the world, according to a former head of a commodities unit at Credit Agricole Corporate and Investment Banking who left the company just months ago.
Credit Agricole’s commodities financing activities concern around 600 people, of which at least half are in France, and involve commitments of tens of billions of euros.
TOUGH MARKETS
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by.
“We can confirm that as a result of the internal structural changes there have been some personnel changes which will affect around 125 employees in our Energy, Transportation and Metals operations around the world,” a Cargill spokesman said.
Cargill has 600 employees in its Geneva office and around 1,100 worldwide in the non-oil Energy Transportation Industrial (ETI) business group.
Cargill will keep the split in its energy business between oil and non-oil with a global non-oil division made up of coal, gas, power and carbon trading and headed by Frank Rivendal, formerly head of power and gas in the U.S. for Cargill.
“Broadly speaking, the big changes are over and very few have been fired so far but there may be a few more job cuts,” one source said.
“In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings,” he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
“That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn’t bonus traders as power and gas were down. Now oil can live or die by its own performance,” said Peter Henry, senior consultant with Commodity Search Partners.
(Additional reporting By Jonathan Leff; Editing by David Gregorio)
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Credit Agricole, the formerly farm-focused bank that had boosted its energy trading in recent years, warned on Wednesday of losses and write-downs as it struggles to cope with the credit crunch. The cuts come just weeks after rival Societe Generale
The deepening euro zone debt crisis has hit French banks hard as traditional sources of dollar funding have evaporated and as they face pressure to meet tougher capital requirements.
Volatile commodity prices, dimmer growth prospects and tougher regulation are also forcing some firms to question the outlook for the decade-long boom in trading raw materials.
Cargill Inc.
Trade sources said more companies may follow.
“What is happening with Credit Agricole is certainly a major trend across banking where the entire commodities trading business is shrinking,” said a senior commodities trader who recently left a major bank for an independent trading house.
“It is happening because of regulations, as proprietary trading is not allowed any more and because people have overspeculated in the past years and got badly burnt.”
Credit Agricole’s commodities trading employs around 100 staff globally, including traders, analysts, marketing teams and technical staff, sources close to Credit Agricole said.
A source in the bank said many employees had only learned of the closure of the commodities trading unit on Wednesday:
“It has all happened very quickly. It is a shock.”
CREDIT PRESSURE
On Wednesday, Credit Agricole Chief Executive Jean-Paul Chifflet said the bank was pulling out of commodities because it had less expertise in the field than other core areas:
“We preferred to stop it completely and devote our energy to other activities,” he said.
But Chifflet told Les Echos newspaper the bank would not sell its holding in Newedge, a commodities futures and clearing brokerage it co-owns with Societe Generale
Last year, the head of Credit Agricole’s commodities trading division, Martin Fraenkel, told Reuters energy was a key growth area because “clients of the bank have ever more need for hedging services in these markets”. The bank had just secured a potentially potent tie-up with power trading giant ETF Trading.
But nearly two years on, European banks are under enormous pressure in credit markets and only very large banks have scope to expand. Credit Agricole may be the first of several banks to drop commodities trading, said the senior commodities trader:
“The major players – Goldman Sachs, Morgan Stanley, Merrill Lynch, Deutsche Bank – are still hiring to replace people who leave to funds and trading houses. But small and medium-sized banks are just shutting everything down.”
Morgan Stanley said on Wednesday it would cut 1,600 employees in the first quarter; it did not say how many, if any, would be in its commodities division, which ranks with Goldman Sachs and JP Morgan as one of the three largest in the world.
A senior oil trader at a major European bank said only very large players could now survive in commodities: “They (Credit Agricole) wanted to have a commodities arm but the appetite for risk was so small it was impossible to do big deals.”
Credit Agricole, which has expanded from its agricultural origins in recent years, said on Wednesday it would cut 2,350 jobs and exit 21 of the 55 countries where it operates and shutter entire businesses including equity derivatives.
BNP Paribas, Europe’s trade finance leader in commodities, has been cutting its trade finance portfolio, drastically reducing exposure to small and medium sized oil and metals firms and reselling part of that exposure, bankers say. A spokeswoman declined to comment.
In November, traders said the bank would close its Houston energy trading office and move some of the team to New York. It has also lost a senior metals trader.
Last week, Societe Generale
“VERY, VERY STRONG REDUCTION”
Many details of the changes only emerged on Thursday.
The bank’s commodities derivatives business, trading oil, gas, metals and softs, is based in London and Hong Kong. It also has market representatives in Tokyo, Singapore and New York.
Credit Agricole has been active in oil hedging, traders said, and does not have a reputation for taking on major risk.
“It was very flow-based, rather than proprietary,” said a London-based trader with a bank. He said the bank hedged oil positions for airlines, taking positions on over-the-counter jet fuel derivatives and gas oil on the IntercontinentalExchange.
Sources close to Credit Agricole say the bank also plans to cut dramatically its commodities trade financing, which involve commitments of tens of billions of euros, but the exact scale of the retrenchment was unclear.
“In terms of commodities financing, they plan a very, very strong reduction in their activities,” a source close to Credit Agricole said, adding the full array of short-term and longer-term letters of credit and export credit would be affected.
The bank’s Geneva-based trade finance activities have about 120 people spread around the world, according to a former head of a commodities unit at Credit Agricole Corporate and Investment Banking who left the company just months ago.
Credit Agricole’s commodities financing activities concern around 600 people, of which at least half are in France, and involve commitments of tens of billions of euros.
TOUGH MARKETS
Cargill is not alone among trading houses responding to a disappointing 2011 performance, Swiss-based coal traders said.
Coal has been a particularly tough market for traders this year because prices have been largely stagnant and liquidity has been lower. Without liquidity and volatility, trading profits have been hard to come by.
“We can confirm that as a result of the internal structural changes there have been some personnel changes which will affect around 125 employees in our Energy, Transportation and Metals operations around the world,” a Cargill spokesman said.
Cargill has 600 employees in its Geneva office and around 1,100 worldwide in the non-oil Energy Transportation Industrial (ETI) business group.
Cargill will keep the split in its energy business between oil and non-oil with a global non-oil division made up of coal, gas, power and carbon trading and headed by Frank Rivendal, formerly head of power and gas in the U.S. for Cargill.
“Broadly speaking, the big changes are over and very few have been fired so far but there may be a few more job cuts,” one source said.
“In 2008-2009 everybody made money because prices were so volatile but this year prices have been stagnant and for the first time in a decade, even the big trading houses are facing a downturn in earnings,” he added.
Last month Cargill former head of coal based in Geneva, Patrick Bracken, left to return to the U.S. and Peter Biston, Geneva-based head of power and gas, a junior gas trader and a power trader lost their jobs.
Cargill Ferrous International in November shut its physical steel trading desks in Hong Kong and Geneva and its top sugar trader, Jonathan Drake, left in early December.
“That (restructuring) makes sense. In the previous structure oil made a lot of money and they couldn’t bonus traders as power and gas were down. Now oil can live or die by its own performance,” said Peter Henry, senior consultant with Commodity Search Partners.
(Additional reporting By Jonathan Leff; Editing by David Gregorio)
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Credit Agricole to cut 2,350 jobs: union source
PARIS (Reuters) – Credit Agricole is to cut 2,350 jobs, primarily in investment banking, a union source told Reuters Wednesday, as the French bank slashes costs and ploughs ahead with a back-to-basics strategy sped up by the eurozone debt crisis.
The job losses include 1,750 at Credit Agricole‘s corporate and investment bank, which employs 13,000 people, the source said, and 600 job at its factoring and consumer finance arms.
The source added 500 of the corporate and investment banking jobs would be shed in France.
A second trade union source confirmed the 1,750 figure.
A Credit Agricole spokeswoman declined to comment.
Banking sources have said the bank may exit up to 20 of the 50 countries where its corporate and investment bank is present.
The bank is following in the footsteps of larger domestic rivals BNP Paribasand Societe Generale , which have announced job cuts primarily in investment banking as they seek to cut debt and wean themselves off funding markets frozen by the economic slump.
Shares of Credit Agricole were down 1.7 percent, at 4.45 euros, at 1126 GMT, underperforming a 0.94 percent drop in the STOXX Europe bank index <.sx7p>. Its stock price has fallen 52.4 percent year to date, against a 34.2 percent drop in the sector.
More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.
Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots — such as Italy’s UniCreditand Intesa Sanpaolo — are also laying off thousands of people.
More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.
Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.
It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.
Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.
Credit Agricole’s strategy under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics focus on retail banking in France and Europe, is a retreat from previous management ambitions of being a global player in financial markets.
The bank is deeply sensitive to ongoing turmoil in the eurozone economy, not just because it holds a substantial amount of Italian government debt but also because it owns local bank subsidiaries in crisis-wracked Greece and Italy.
Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.
This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities .
While Credit Agricole would be open to letting Citic increase its stake in the ventures — now at 19.9 percent — it aims to at least keep majority control, according to a person familiar with the bank’s thinking.
(Additional reporting by Sarah White in London; Editing by Jodie Ginsberg and David Hulmes)
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The job losses include 1,750 at Credit Agricole‘s corporate and investment bank, which employs 13,000 people, the source said, and 600 job at its factoring and consumer finance arms.
The source added 500 of the corporate and investment banking jobs would be shed in France.
A second trade union source confirmed the 1,750 figure.
A Credit Agricole spokeswoman declined to comment.
Banking sources have said the bank may exit up to 20 of the 50 countries where its corporate and investment bank is present.
The bank is following in the footsteps of larger domestic rivals BNP Paribas
Shares of Credit Agricole were down 1.7 percent, at 4.45 euros, at 1126 GMT, underperforming a 0.94 percent drop in the STOXX Europe bank index <.sx7p>. Its stock price has fallen 52.4 percent year to date, against a 34.2 percent drop in the sector.
More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.
Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots — such as Italy’s UniCredit
More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.
Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.
It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.
Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.
Credit Agricole’s strategy under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics focus on retail banking in France and Europe, is a retreat from previous management ambitions of being a global player in financial markets.
The bank is deeply sensitive to ongoing turmoil in the eurozone economy, not just because it holds a substantial amount of Italian government debt but also because it owns local bank subsidiaries in crisis-wracked Greece and Italy.
Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.
This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities .
While Credit Agricole would be open to letting Citic increase its stake in the ventures — now at 19.9 percent — it aims to at least keep majority control, according to a person familiar with the bank’s thinking.
(Additional reporting by Sarah White in London; Editing by Jodie Ginsberg and David Hulmes)
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