December 14, 2011 / 2:33 PM / in 6 years

Credit Agricole to cut 2,350 jobs: union source

PARIS (Reuters) - Credit Agricole (CAGR.PA) is to cut 2,350 jobs, primarily in investment banking, a union source told Reuters Wednesday, as the French bank slashes costs and ploughs ahead with a back-to-basics strategy sped up by the eurozone debt crisis.

The job losses include 1,750 at Credit Agricole’s corporate and investment bank, which employs 13,000 people, the source said, and 600 job at its factoring and consumer finance arms.

The source added 500 of the corporate and investment banking jobs would be shed in France.

A second trade union source confirmed the 1,750 figure.

A Credit Agricole spokeswoman declined to comment.

Banking sources have said the bank may exit up to 20 of the 50 countries where its corporate and investment bank is present.

The bank is following in the footsteps of larger domestic rivals BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA), which have announced job cuts primarily in investment banking as they seek to cut debt and wean themselves off funding markets frozen by the economic slump.

Shares of Credit Agricole were down 1.7 percent, at 4.45 euros, at 1126 GMT, underperforming a 0.94 percent drop in the STOXX Europe bank index .SX7P. Its stock price has fallen 52.4 percent year to date, against a 34.2 percent drop in the sector.

More than six months of intense market turmoil sparked by the euro zone debt crisis is pummeling investment banks globally, denting their bond and stock trading income and sparking a wave of layoffs in Asia, the U.S. and Europe.

Citigroup was last week among the latest to press ahead with job cuts, while banks in some of the crisis hotspots -- such as Italy’s UniCredit CRDI.M and Intesa Sanpaolo (ISP.MI) -- are also laying off thousands of people.

More than 120,000 job losses have been announced this year, and many in the industry fear the tally will be greater than at the height of the financial crisis in 2008, as redundancies continue into 2012.

Like its French rivals, Credit Agricole is primarily pulling back in certain financing businesses, such as those in dollars, which have become harder for it to access, and will cut staff accordingly.

    It also has a European equity broker, Chevreux, and a majority stake in Asian brokerage CLSA. But the bulk of cuts are likely to fall in fixed-income, which houses its rates and credit divisions, analysts said.

    Credit trading in particular has come under pressure at all banks this year as wary investors shy away from the market and new regulation bites.

    Credit Agricole’s strategy under new Chief Executive Jean-Paul Chifflet, who has espoused a back-to-basics focus on retail banking in France and Europe, is a retreat from previous management ambitions of being a global player in financial markets.

    The bank is deeply sensitive to ongoing turmoil in the eurozone economy, not just because it holds a substantial amount of Italian government debt but also because it owns local bank subsidiaries in crisis-wracked Greece and Italy.

    Chifflet’s team is mulling various ways of bolstering the bank’s balance sheet, banking sources say, even though Credit Agricole’s robust parent network of regional banks has provided a cushion that has made raising additional capital unnecessary.

    This may include more deal-making. The bank is close to announcing the sale of its private-equity activities, while it has also struck a $374 million deal to sell minority stakes in its CLSA and Cheuvreux brokerage brands to Chinese brokerage Citic Securities (600030.SS).

    While Credit Agricole would be open to letting Citic increase its stake in the ventures -- now at 19.9 percent -- it aims to at least keep majority control, according to a person familiar with the bank’s thinking.

    Additional reporting by Sarah White in London; Editing by Jodie Ginsberg and David Hulmes

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