As Predicted Last Year, The French and the Greeks Are In A Race For The Biggest Bank Run!

• As Predicted Last Year, The French and the Greeks Are In A Race For The Biggest Bank Run! 
  by http://boombustblog.com/
  On Saturday, 23 July 2011 I penned “The Anatomy Of A European Bank Run: Look At The Banking Situation BEFORE The Run Occurs!” wherein I went through both the motive and the mechanism of a European bank run, focusing on Greece and France as impetus.
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  Fast forward nearly one year later and the WSJ reports Crédit Agricole Girds Greek Unit for Greece Euro Exit, as excerpted:
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  PARIS—Crédit Agricole SA ACA.FR +3.49% is making contingency plans to abandon its Greek bank or merge it with a conglomerate of domestic banks in the event of Greece leaving the euro zone, according to a person with direct knowledge of the plans.
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  The admission offers the starkest evidence yet of international companies preparing for the worst in Greece, just days ahead of elections that could set it on a path to leave the currency union. It also underscores the lengths to which France’s third-largest listed bank will potentially go to draw a line under its disastrous foray into Greece.
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  … Crédit Agricole Chief Executive Jean-Paul Chifflet has said publicly he doesn’t see a Greek exit as the most likely scenario. But the bank is pressing ahead with contingency planning focusing on two possible options, the person familiar with the matter said: consolidating its Emporiki Bank of Greece SA unit into a larger conglomerate of Greek banks, in which the French lender’s stake would get diluted down to 10%, or simply walking away and letting Emporiki fail.
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  “Politically, if Greece were to exit the euro zone, Crédit Agricole would have no obligation to stay,” said this person. The Paris-based lender is also considering plans to transfer some “good” assets from Emporiki to Crédit Agricole, the person said, without disclosing details.
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  Abandoning Greece’s largest foreign-owned retail bank could expose Crédit Agricole to legal and reputational risks and would echo its abrupt departure from its Argentine bank units 10 years ago after the Latin American country defaulted on its debt.
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  Analysts estimate a Greek exit from the euro zone would cost the bank at least €5.2 billion. Crédit Agricole’s direct funding to Emporiki stood at €4.6 billion in March.
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  …Crédit Agricole has been scrambling over the past year to stem the red ink at its Greek operations. Its acquisition of Emporiki in 2006 saddled the French lender with billions of euros in losses and is one of the reasons its shares have plunged more than 70% over the past year, sparking uproar among shareholders. Emporiki is Greece’s sixth-largest bank.
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  Last week, the bank secured a small bit of breathing space when Emporiki finally succeeded in getting funding from Greece’s central bank, the Crédit Agricole spokeswoman said. Crédit Agricole had lodged numerous similar requests to borrow from the Greek central bank’s so-called Emergency Liquidity Assistance program, and was repeatedly turned down because Emporiki is foreign-owned. According to the person close to the matter, Greece’s central bank finally agreed to the request, after Crédit Agricole said it would otherwise leave the country.
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  This is essentially the specific institutional bank run that I warned about last year. In addition, I gave my paying subscribers plenty of notice on this particular bank back in 2010 – reference  Greek Banking Fundamental Tear Sheet. As for how that institutional bank run thing works, we excerpt “The Fuel Behind Institutional “Runs on the Bank” Burns Through Europe, Lehman-Style“:
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  read more!

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