French lender Crédit Agricole SA will pump €1.2 billion of capital into its retail banking subsidiary Crédit Lyonnais SA as part of a €1.5 billion recapitalization plan mandated by the ECB.
The unit, also known as LCL, said the move is intended to enable it to meet new capital rules that it was not previously subject to, adding that the capital injection will not have any impact on the group's solvency, Reuters reported Feb. 23.
"There are no economic problems. It is a technical process of capital increase," a spokeswoman for LCL reportedly said, adding that the unit is "doing well." LCL's fourth-quarter 2017 net income declined 19.3% year over year to €138 million, while revenues at the unit fell 3.9% to €846 million.
Crédit Agricole, which reported year-over-year increases in fourth-quarter and full-year 2017 profits despite taking a hit from tax adjustments in France and the U.S., said LCL had reached a turning point and that revenues at the unit should improve, Reuters said.