January 19, 2018 / 3:59 PM / a month ago

UPDATE 1-France's Credit Mutuel Arkea to study break-up from parent group

PARIS, Jan 19 (Reuters) - The board of Credit Mutuel Arkea, part of France’s fifth-biggest lender, gave the green light to management on Friday to do whatever is necessary to break away from its parent group of cooperative banks.

The boards of two out of three of the regional banks making up Credit Mutuel Arkea voted in favour of action to separate from the parent group in what is the latest twist in a long-standing standoff that has become a headache for regulators.

The parent Groupe Credit Mutuel has undertaken a reform of its organization to keep it in line with regulatory rules.

Credit Mutuel Arkea, which comprises regional banks in Western and Central France, as well as online bank Fortuneo, has opposed the reform, which would make the governance and strategy-setting more centralized.

“The board of directors ... gave a mandate to management to take any action allowing Credit Mutuel Arkea to become an independent, cooperative group, totally separate from the rest of Credit Mutuel,” the company said in a statement.

Arkea had already challenged the ECB’s power to oversee the whole network of lenders as a single entity and the regulator has rebuffed the demand.

French central bank governor Francois Villeroy de Galhau told a Senate hearing this week that if the group were heading to a break-up, then it would be necessary to study “prudential soundness” of the two possibly separate entities, protection of depositors and also the legal scheme for the separation.

The French treasury asked former central bank governor Christian Noyer to study all possible options and his report should be submitted soon, Villeroy added.

Credit Mutuel Arkea had 120.4 billion euros in assets as of end 2016, while the group’s balance sheet overall stood at 793.5 billion. Groupe Credit Mutuel is France’s fifth-largest bank by assets and had a 17.1 percent market share in deposits in 2016. (Reporting by Maya Nikolaeva and Matthieu Protard, Editing by Leigh Thomas)

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