Crédit Agricole rules out major purchases after sub-prime losses

Crédit Agricole has ruled itself out of "significant acquisitions" after the credit crunch sent it slumping to its first quarterly loss since listing in 2001. The French bank did not close the door completely on a move for Société Générale, however, saying it would "not remain indifferent" should the beleaguered group be approached by a rival.

Crédit Agricole spiralled to a loss of €857m (£657m) in the fourth quarter of 2007, reversing a €1.1bn profit posted in the corresponding period a year ago.

The group said its results "were severely affected by the crisis in the structured credit markets", while its investment banking business, Calyon, was hit with exceptional €3.3bn impairment charges relating to its capital market activities.

René Carron, chairman of Crédit Agricole, said: "With its sound capital base, the group will make organic growth its priority, and it is not considering any significant new acquisitions."

Despite the writedowns, Crédit Agricole's shares rose over 5 per cent, to €18.09. A spokeswoman for the group said: "The underlying performance of the business has been strong. The group has been transparent, responded to the Basel II regulations and the announcement about scaling back acquisitions helped."

Its position over deals would alter should a rival attempt to buy SocGen. Bertrand Badré, Crédit Agricole's chief financial officer, said yesterday "concerning our domestic market and our position as a leader in this market, we cannot remain indifferent to the changes which might occur".

Crédit Agricole is understood to have considered a potential approach for certain SocGen businesses earlier this year. A source close to the group said it had never looked at an offer for the whole group, and should it come to the table in the future, the deal would only be for part of SocGen's operations. "The results might not even be considered a significant acquisition," the source added.

SocGen became a takeover target after trading losses worth €4.9bn were revealed in January, prompting the bank to launch an emergency rights issue. Crédit Agricole was one of several suitors understood to be interested in a deal, with BNP Paribas backed as the favourite by several analysts.

Crédit Agricole said yesterday it had also moved to shore up its risk management and control systems. The group started reinforcing controls after it uncovered unauthorised trading losses in New York in September.