Paris-based Credit Agricole has applied to the Federal Reserve Board to open a representative office in Houston as part of a broader expansion into energy-related financial transactions.
Christian Merle, head of the $360 billion-asset bank's international division, said the move into Dallas will help the bank develop market intelligence and arrange deals that it might not be able to do from its current offices in New York and Chicago. In particular, Credit Agricole executives said that the bank plans to expand lending, risk management, and asset securitization in the oil and gas industry.
The French bank has some $6.5 billion in U.S. assets and has steadily shifted its focus away from corporate finance and commodities-related lending to more complex financial transactions. In a major move last year, Credit Agricole obtained Federal Reserve Board approval to expand securities brokerage in the United States through Credit Agricole Securities Inc., New York. It can now also broker nonfinancial commodities futures and options through Credit Agricole Futures Inc. in Chicago.
"We are firm believers in proximity," said Mr. Merle. He added that the Houston office will also be used to serve the bank's customers across the Southeast.
The move into energy asset securitization would be a new step for Credit Agricole. The French bank already arranges or participates in around $350 million worth of asset securitizations a year, mainly consumer and trade receivables.
"Energy asset securitization is not very advanced, but it is picking up speed quickly," noted Bernard Chauvel, president and genral manager of the bank's U.S. operations.
However, Mr. Chauvel cautioned that the program will not be implemented until Credit Agricole obtains approval from the Fed to open the Houston office.
To help implement the planned program, Credit Agricole last year hired Brian Knezeak, who handled similar energy-related transactions at Citicorp.
"Capital markets are interested in purchasing these products, and we plan to act as intermediaries structuring them," Mr. Knezeak said.
Securitizing energy-related assets, such as using future oil or gas production to pay off a loan, is increasingly attractive to producers, he pointed out, because it enables them to convert what would normally be considered debt into deferred payments, thereby freeing up capital that can be used for other purposes.