“Credit Agricole SA (ACA), France’s third- largest bank by market value, will book 2.68 billion euros ($3.64 billion) of goodwill writedowns in the fourth quarter to reflect stricter rules and a worsening economy.
“These measures do not involve any cash outflows and do not affect the strength of the group,” the Montrouge-based bank said in a statement today. While the goodwill charges come “primarily” from complying with tighter rules, “they also reflect the present macro-economic and financial environment in the relevant countries and business lines,” it said.
Credit Agricole’s total one-time charges, which include costs related to a revaluation of its own debt and a writedown on its stake in Portugal’s biggest publicly traded bank, will reduce the bank’s net earnings by about 3.8 billion euros. Credit Agricole, which had 16.9 billion euros in goodwill on its balance sheet at the end of September, is taking the writedowns following recent recommendations from the European Union’s markets authority.
The European Securities and Markets Authority called on Jan. 21 for improvements in disclosures after reviewing 800 billion euros of goodwill assets at 235 companies in 23 countries across Europe. Goodwill is an accounting convention that represents the amount paid for an acquisition over and above the fair value of its net assets.
