Credit Agricole has 677 bps capital depletion in stress-test

Credit Agricole has 677 bps capital depletion in stress-test

Credit Agricole's patient, non-aggressive expansion strategy has proven successful in Italy, where it has become a key player in the country's banking consolidation saga. This strategy has allowed the French group to turn Italy into its biggest market outside France, accounting for 15% of its reported profit in 2024 [1].

UniCredit's surprise bid for Banco BPM in November 2024 derailed a government project to promote a tie-up between BPM and Monte dei Paschi di Siena, a state-backed lender. In contrast, Credit Agricole's cooperative approach towards Italian authorities has made it a reliable counterpart for successive administrations in Rome [1].

Since the end of 2020, Credit Agricole's retail business in Italy has added 15 billion euros in customer loans, while the domestic franchises of market leader Intesa Sanpaolo and UniCredit have seen their loan books shrink by twice and 22 billion euros, respectively [1].

Credit Agricole's increased stake in Banco BPM, set to go just below the mandatory takeover threshold of 25%, will allow it to remain a significant shareholder in an enlarged BPM. This move is part of the French bank's aim to wield sufficient authority to protect its commercial partnerships [1].

The bank's consistent leadership and corporate culture have allowed it to successfully roll out its expansion strategy with a view to the long term. Despite tense relations between Italy and France over various issues, including banking sector strategy, Credit Agricole has managed to keep governments of different colors on its side by focusing on its commercial interests and making small acquisitions to build a local franchise [1].

References:
[1] https://www.zawya.com/en/news/insights/credit-agricoles-tortoise-strategy-pays-off-in-italys-m-and-a-contest-dtknxu2v