Credit Agricole Group said the collapse of Portuguese lender Banco Espírito Santo (BES), in which it has a 14.6% stake, had slashed its second-quarter profits by 97.5% to EUR17 million.
The French banking giant took a EUR708 million hit from its stake in BES, which reported a record EUR3.49 billion second-quarter loss.
The group said it had been deceived by the family behind the Espirito Santo companies, and would back any legal action by a new management team.
"Today the group (BES) must deal with the issues specific to the Espirito Santo family and which took place outside the sphere of the bank’s corporate governance and which were unknown to us," Credit Agricole CEO Jean-Paul Chifflet said.
"We can only regret having been misled by the family with which Credit Agricole was trying to create a true partnership to build the biggest private bank in Portugal."
The group’s quarterly revenue fell 6.1% to EUR3.934 billion.
In Private Banking, assets under management rose by 2.5% over the first half to reach EUR135.5 billion at 30 June 2014, due mainly to a positive market effect that more than offset net asset outflows of EUR0.6 billion in the first half of 2014.
In asset management, Amundi’s assets under management were EUR821.4 billion at end-June 2014, up 5.7% since end-December 2013. Over the period, net inflows have totalled EUR12.6 billion. Long assets accounted for EUR17.7 billion of inflows, both in active and passive investments., the bank said in a statement.