France-based Credit Agricole SA, one of the largest European retail banking groups said yesterday that it would repay the €3-billion ($4.5 billion) government bailout it received, following the global credit crisis triggered by the fall of US banking giant, Lehman Brothers Holdings Inc, in September 2008.
Credit Agricole said in a statement that it will fully redeem the €3 billion euro in highly subordinated notes that were taken up by SPPE- Société de Prise de Participation de l'Etat, the government body set up to bolster the capital of banks under strain- in December 2008.
The bank said that the redemption has become possible through the ongoing placement of highly subordinated notes including $1.35 billion in the European and Asian institutional markets, as well as $1 billion on other similar issues in the US market, over the past several months.
The bank intends to fully repay the government funds on 27 October by selling debt to the tune of €850 million ($1.3 billion) in the form of perpetual tier 1 bonds in euros or pounds.
A subordinated note is where, if the borrower gets into financial difficulty, lenders will be repaid only after other lenders, or will get a fraction of what they have lent.
The Paris-based banking major is among the top five banking groups which received government support of around €20 billion to weather the global financial crisis. Other banks are: Societe Generale, BNP Paribas, Credit Mutuel and BPCE.