MercoPress. South Atlantic News Agency

France’s Crédit Agricole selling its banking assets in Uruguay

The bank will concentrate operations in Europe and the Mediterranean.

French bank Credit Agricole officially announced this week it had begun consultations to sell its banking interests in Uruguay where it operates under the name of Credit Uruguay.

“These consultations are part of Credit Agricole's drive to refocus its retail banking operations on Europe and the Mediterranean area announced with the capital increase in 2008,” the bank said in a statement.

Credit Uruguay is the third-largest bank in Uruguay's private sector with 480 employees and 36 branches. It is wholly owned by Credit Agricole, with over 1 billion US dollars in total assets. Credit Agricole said it was in contact with Uruguay's financial authorities on the matter.

According to local sources several banks are interested in taking over Credit Agricole in Uruguay, including Spain’s Banco Santander and BBVA; Brazil’s Itaú, the local Banco Comercial and HSBC which in Uruguay operates from a licence from Argentina.

The news came as a surprise since the bank earlier this month had inaugurated a 700 square meters state of the art complex in one of Montevideo’s most important shopping centers. Crédit Agricole Group is one of France’s main and most prestigious financial institutions and has offices in 70 countries. The bank arrived in Uruguay in 1998.

Marcelo Oten, CEO of Credit Uruguay said that the fact the bank is leaving has nothing to do with Uruguay still being in the OCDE grey list of countries which supposedly have not complied with the necessary international transparency financial information standards. Uruguay for a long time has been identified as a tax haven for off shore banking

“The decision is an only one, pure and exclusively referred to a commercial decision to refocusing geographically and absolutely commercial” said Oten.

He added that the issue of the “grey list is an additional issue which confuses the situation, but it is not at all the reason or motive for the Credit Agricole Group’s decision”, added Oten.

He pointed out that the bank would not be leaving the country without previously transferring its operations to another institution since the objective is to ensure “the best result possible”. This means that branches will continue to operate normally until the moment of the transfer.

“Whichever institution finally opts to continue with Credit Uruguay operations will assume all of the bank’s assets and liabilities from the bank” said Oten.

Regarding the staff, Oten said they are looking for the best solution for everybody, “trying to find the best institution that can continue the activities we have displayed so far”, so that no job is lost.

Uruguayan Economy minister Alvaro García said the issue had been addressed at Monday’s Uruguayan cabinet meeting and the decision was “understandable and is normal in international banking”.

“Depositors, clients, staff have nothing to worry, it’s a normal transaction; we have been informed with sufficient time and there are no surprises. There are several banks interested in taking over the Credit Uruguay operations”.

However in spite of all the denials, in the background there’s an ongoing battle between the so called “Anglo-Saxon” (UK/US) banking practices and EU continental banking, mainly France and Germany that object to what they consider “excessive speculation” and want stiffer global regulations on all banks including a strict compliance with OECD standards on financial and tax transparency information.

France, Germany and even some British bankers are impatient that banking regulations based on the lessons from the 2007/08/09 financial collapse have yet to be put into ink and approved.