French bank Credit Agricole (CA) is heading for a historic loss for 2012 after acknowledging on Friday that it will book a massive fourth-quarter charge, blaming tighter regulations and the financial climate.
CA put the amount of the impairment charge at 2.68-billion-euro ($3.65 billion). The price of shares in the bank fell sharply in initial trading but then showed a net gain of about 2.0 percent.
On Thursday, the stock had lost 1.54 percent on press reports that spoke of the heavy charge.
The part of CA that is publicly listed was already showing a net loss of 2.48 billion euros for the first nine months of the year, after posting its first loss ever in 2011, of 1.47 billion.
The full-year results, to be released on February 20, come after CA disappointed investors with third-quarter earnings that reflected the cost of unwinding Greek investments.
The French bank's operations in Greece have proved expensive, with a private sector writedown in Athens' public debt last year costing CA 3.2 billion euros.
In the first six years that its shares were listed, from 2001 to 2007, CA went on a buying spree, and the difference between what it paid for those acquisitions and their present market value amounted to 17.4 billion euros at the end of September.
The bank stressed that the impairment charge has "no impact on its solvency or liquidity" because "goodwill is already fully deducted in the calculation of solvency ratios."
In addition, the charges "do not involve any cash outflows and do not affect the strength of the group," a statement said.
Most of the fourth-quarter charge comes from consumer finance, which accounted for 923 million euros and in international retail and banking, which accounted for 921 million euros.
Most of the second amount -- 852 million euros -- came from retail banking in Italy, a CA statement said.
"These accounting charges primarily reflect the impact of tighter regulatory requirements, hence the reduction of the value in use of the relevant entities," the statement said.
"They also reflect the present macro-economic and financial environment," it added.
In addition to the fourth-quarter charge of 2.68 billion euros, the French bank said it had lowered the value of its 20.2 percent holding in the Portuguese bank BES, which is now estimated to be worth 267 million euros.
The fourth-quarter results will also include a loss of 850 million euros in net banking income that is linked to a re-evaluation of CA's debt.
In all, exceptional items are expected to cut about 3.8 billion euros from CA's earnings in the fourth quarter.