There was a big bill for France’s Credit Agricole from the problems of Portugal’s Banco Espirito Santo in which it has a 14.6 percent stake.

The Portuguese bank’s troubles cost the French group 708 million euros, all but wiping out its second-quarter net profit.

Credit Agricole’s Chief Executive Jean-Paul Chifflet spoke of being “misled” by the Espirito Santo family who founded the bank.

He told journalists: “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.

“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.”

Chifflet added that if there were legal action taken against the family the French group would participate.

Credit Agricole took a 502 million euro hit reflecting its share of Banco Espirito Santo’s 3.6 billion euro loss for the first-half of the year. Another 206 million came from writing down the value of its stake to zero.

Credit Agricole, which is France’s third-largest listed bank and majority owned by a network of cooperative regional lenders, did though see adjusted net income rose to 1.003 billion euros from 682 million a year earlier and its share rose in Paris.

The bank said it remained on track to hit its goal of increasing net profit by more than 60 percent in two years by cutting costs and selling a wider range of existing products to customers to combat slow growth in France.

It has been selling minority shareholdings and pulling out of markets such as Greece to meet tougher post-crisis regulation and improve profitability. It returned to profit in 2013 after two years of losses.

Net income from French regional banks fell 8.0 percent in a “sluggish market with the gloomy economic environment coupled with an unfavourable regulatory climate”.

with Reuters