Credit Agricole to raise $9.1 bln after writedown : US Business

By Sudip Kar-Gupta

PARIS (Reuters) - France's biggest retail bank Credit Agricole sought 5.9 billion euros ($9.1 billion) from its shareholders to shore up its capital after new writedowns at its Calyon investment bank, hitting its shares.

Agricole's confirmation of the planned rights issue and a 1.2 billion euro Calyon writedown that will hit first-quarter profits, came after a banking industry source said Calyon Chief Executive Marc Litzler might be on his way out of the company.

Shares in Agricole were down 5.5 percent at 19.60 euros in mid-afternoon trade, the biggest loser on France's benchmark CAC-40 index <.FCHI>. The CAC-40 was up 0.8 percent while the DJ Stoxx European bank sector <.SX7P> fell 0.1 percent.

"It's very, very bad. It's one loss too many," said Stratege Finance fund manager Valerie Cazaban.

Agricole said it expected Calyon to take the writedown during the first quarter, due to the credit crunch.

This would lead to a net profit of 892 million euros for the banking group -- down 66 percent from last year and worse than many analysts' forecasts.

Agricole formally publishes first-quarter numbers on Thursday. In March, it reported a fourth-quarter net loss of 857 million euros.

Investment bank Dresdner cut its rating on Agricole to "reduce" from "hold" and said the bank remained in its "unattractive" portfolio. It said Agricole's capital increase could dilute its 2009 earnings per share by 12-22 percent.

Cazaban said she was steering clear of Agricole shares and preferred to hold the shares of rival French banks BNP Paribas and Societe Generale .

SocGen reported on Tuesday a 23 percent fall in first-quarter net profit, better than analysts had expected. BNP Paribas, France's largest listed bank, posts its first-quarter numbers on Wednesday.

SocGen shares were down 0.8 percent while BNP Paribas rose 1.1 percent.

LITZLER LIKELY TO GO

Agricole's rights issue is the latest capital-raising exercise from a global banking sector damaged by losses in the U.S. subprime mortgage market.

Last month, British banks Royal Bank of Scotland and HBOS announced plans to raise 12 billion pounds and 4 billion pounds respectively, through rights issues.

Agricole said that in future, it would allocate less capital to the Calyon investment bank and give more to its retail banking operations, adding it planned to lower Calyon's risk profile and cut costs at the division.

Agricole's statement made no mention of Litzler's position, although a banking industry source close to Calyon told Reuters on Monday press reports of Litzler's departure were "realistic."

Patrick Valroff, head of Agricole's consumer credit unit Sofinco, has been tipped in media reports to replace Litzler.

Spokespeople at Agricole and at Sofinco declined to comment on the situation concerning Litzler and Valroff on Tuesday.

Litzler came under pressure last September after Calyon announced an unauthorized trading loss. It had to book a 250 million euro charge related to an unauthorized trading position at its New York subsidiary.

Calyon has consistently lagged BNP Paribas and SocGen in investment banking.

According to data from Thomson Reuters, Calyon ranked number 17 in a global league table of debt capital market transactions for 2008, up one spot from last year but slightly behind BNP Paribas and SocGen.

It gained one spot to take the 16th position for equities sales, but for mergers and acquisitions Calyon dropped 14 places to number 45.

Iris Finance fund manager Michael Sellam said he thought Litzler was likely to go.

"I think he'll be pushed out," said Sellam, who has also decided not to hold Agricole shares.

Agricole shares have fallen around 15 percent since the start of 2008, in line with a similar decline in the DJ Stoxx European banking sector <.SX7P>.

(Additional reporting by Maya Thatcher in London; Editing by Andrew Callus and Elizabeth Fullerton)

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