Credit Agricole shuts down PH officePhilippine Daily Inquirer
Credit Agricole Corporate and Investment Bank has decided to shut down its branch in the Philippines as it struggles with hefty losses stemming from the debt crisis in the euro zone.
“Credit Agricole is refocusing and realigning its global network in response to its current circumstances,” BSP Deputy Governor Nestor Espenilla Jr., who heads the banking supervision division, told the Inquirer.
Credit Agricole, which is based in France, joins the list of European banks that have closed their branches in the Philippines and other emerging countries in an effort to cut costs and beef up capital.
The announcement of the closure of Credit Agricole’s Manila branch came after the release of reports saying it incurred $3.63 billion in losses in the third quarter of the year, partly due to its exposure to debt-ridden Greece.
According to estimates, its move to dispose of its unit in Greece dragged its income for the third quarter by over a billion dollars.
Meantime, analysts said European banks were likewise being prompted to dispose their assets, including income-earning units in emerging Asian economies, to meet rising capital requirements.
Analysts said the tighter capital requirements provided under Basel 3, which banks must fully comply with by 2018, are forcing banks with minimal capitalization to sell assets.
Basel 3 is an updated set of international bank regulations aimed at ensuring that banks are strong enough to withstand future crises.
The stricter capitalization requirements were put forward following the latest financial crisis in the United States and the euro zone.
Central banks all over the world have agreed that banks must set aside more capital to increase their ability to absorb losses.
In the case of the Philippines, the BSP said, capitalization levels of most large banks are already enough to meet the stricter requirements stated under Basel 3. Michelle V. Remo