Credit Agricole and its €560 Million Share Buyback Program

Credit Agricole Group is the largest cooperative financial institution in the world, and this fact underlines its importance. This famous bank consists of a network of Credit Agricole local banks, the 39 regional banks, and a central institute, the Credit Agricole S.A. The main cooperative financial institution is listed through Credit Agricole S.A., which is an intermediate holding company on Euronext Paris’ first market. Also, it is part of the CAC 40 stock market index.

The local, as well as regional, are cooperative companies. More than 2,500 local banks form the foundation of the group. They have millions of stakeholders, who are both clients and owners of the share capital (through ownership shares) of the local banks, in accordance with the cooperative governance principle. Local banks also hold the bulk of the capital of the regional banks. At the annual general meetings of the local banks, the stakeholders appoint more than 32,000 volunteer directors.

Regional banks are cooperative entities as well as fully-fledged banks. They offer a wide range of financial products and services to millions of clients. Regional banks operate a huge network of branches and ATMs, which provide customers with basic banking services. Some regional banks merged to improve their financial strength. Also, this way it is easier to compete with rivals. Regional banks discuss policy, express their views, and represent themselves Federation Nationale du Credit Agricole (FNCA).

FNCA provides services to regional banks, particularly in the fields of vocational training, through Credit Agricole Mutuel training center as well as human management.

Credit Agricole and its decision

On Monday, Credit Agricole stated that it would launch a €560 million ($680 million) share buyback program. The bank plans to launch that program by the end of the year. The purpose of the share buyback program is to offset the impact of the scrip dividend payment option on earnings per share. The scrip dividend payment evolved in the issuance of 175,330,851 new shares, as 85% of the bank’s shareholders chose the option.

Several months ago, the lender stated that it would pay a 0.80 euro per share dividend with a scrip option, in accordance with European Central Bank  recommendations. The company said it could then launch a buyback program, representing up to 5% of its capital.