(AOF) – Crédit Agricole launched on January 4, 2022 an issue of perpetual super subordinated bonds Additional Tier 1 (AT1) at revisable fixed rate for 1.25 billion US dollars. These Bonds were issued to allow Crédit Agricole Group and Crédit Agricole SA to maintain great flexibility in their management of Tier 1 capital.
The Bonds have no fixed maturity. They will bear interest at the fixed rate of 4.75% per year (paid quarterly) until September 23, 2029 (excluded), from which date the interest rate will be reset every five years to the 5-year Constant Maturity Treasury rate. in force to which will be added the initial margin of 323.7 basis points.
The Bonds have been subscribed by institutional investors in the United States, Europe and Asia. The offering attracted considerable interest, with an order book surpassing US $ 4.8 billion at its peak, and containing more than 170 investors at the final coupon level.
AOF – LEARN MORE
– Listed vehicle of the mutualist group of the same name, 1
time
French bank and 8
th
global;
– Net banking income of € 35.6 billion, generated by local banking at 57%, by specialized financial services at 18%, by large clientele banking at 17% and at 8% by savings management and insurance;
– Business model redefined in 2019 in 3 points – relational excellence by becoming the preferred bank for individuals, entrepreneurs and institutions, local responsibility to support digitization and societal commitment by amplifying mutualist commitment;
– Capital 55.3% owned by the regional mutuals, hence the strong presence of their representatives on the board of directors (10 out of 21 members) chaired by Dominique Lefebvre, Philippe Brassac being CEO;
– Solid financial position with a CET 1 ratio of 17.4% at the end of September 2021.
Challenges
– Medium-term plan 2019-2022: desire for growth by being 1st in conquering customers, revenue synergies of € 10 billion and technological transformation with a dedicated budget of € 15 billion / target of net income above € 5 billion, and profitability equity of more than 16%;
– Innovation strategy, one of the 3 levers of the business model: internally: 90% of the Group’s entities have a “data-centric” architecture in 2022, and € 300 million in IT efficiency gains , 100% of IT employees trained in new technologies in the Information System University and 100% of emerging technologies tested on new business services / towards customers: extension of the range of leading applications (Ma Banque Pro, Pro & Entreprises LCL , etc…), offers digital and mobile checkout solutions for small / medium-sized traders, European electronic payment services for large brands and a full range of e-commerce;
– Environmental strategy detailed in the “Planet 21” roadmap: financial indicators: financing of 1/3 renewable energy project (1/4 in 2020), doubling in 3 years of the green financing portfolio (2
th
world rank) / creation of an extra-financial reporting platform / total withdrawal from coal financing in 2030 / consumption of hydraulic energy (already 92%) for its data centers, agencies and administrative sites / SRI offer in management of assets (€ 22 billion in green and social assets at Amundi);
– Fallout from Chinese market penetration (1
time
foreign asset management company) and Indian (cash management offer);
– Diversification of investment banking in mid-size companies.
Challenges
– Net assets of € 13.2 per share at the end of September 2021, to be compared with the market price;
– Monitoring of the cost / income ratio, down slightly to 57.2%;
– Integration of the Italian CreVal and acquisition of Lyxor which will give the group 14% of the ETF market in Europe;
– At the end of September 2021, a 7.3% increase in revenues and a 72% rebound in net profit;
– Dividend2020 of € 0.8, payable in shares and share buyback program.
Many challenges for European banks
The European retail banking model is particularly challenged by the digital boom. Some are withdrawing from this activity, as is the case with HSBC. In addition, there is an increase in risks. Thus, according to the ECB, the strong activity of the big banks in the market for leveraged transactions and the markets for equity-linked derivatives exposes them to excessive risk-taking.
As for French banks, since the health crisis, they have been increasingly exposed to cyber risk following the need to switch financial activities massively and rapidly towards teleworking and the provision of remote services.