Crédit Agricole to dismantle 35% of "Switch" guarantee mechanism

Crédit Agricole S.A. announced that it will dismantle 35% of the "Switch" guarantee mechanism between the regional banks and Crédit Agricole S.A. on March 2, 2020. This action follows less than a year after the launch of its new medium-term plan, which included a commitment to halve this guarantee by 2022.

The "Switch" guarantee mechanism transfers a portion of Crédit Agricole S.A.'s prudential requirements related to its insurance activities to the regional banks in exchange for a fixed fee. The partial unwinding of this intragroup operation is part of an ongoing effort to simplify Crédit Agricole S.A.'s solvency structure.

This partial dismantling is expected to strengthen Crédit Agricole S.A.'s earnings capacity, providing a positive impact of €58 million in 2020 and approximately €70 million on a full-year basis to net income. The operation will reduce Crédit Agricole S.A.'s CET1 ratio by approximately 40 basis points from March 31, 2020.

Crédit Agricole reaffirms its medium-term plan target for the CET1 ratio at 11% for Crédit Agricole S.A., which compares favorably to the supervisory requirement (SREP) of 8.7%. This transaction is stated to have no impact on the results or solvency ratios of the Crédit Agricole Group as a whole. Crédit Agricole S.A., as the central body of the Crédit Agricole Group, benefits from the statutory internal financial solidarity mechanism.