Credit Agricole, France's third-largest bank, agreed to sell its Greek unit Emporiki Bank to Alpha Bank for a token price of €1, ending a six-year-long investment in Europe's most indebted country.

Credit Agricole will inject a further €550 million of capital into Emporiki and buy €150 million of convertible bonds issued by Alpha Bank as part of the transaction, the French company said in a statement today.

The boards of both banks and the Hellenic Financial Stability Fund have approved the sale, Credit Agricole said.

Credit Agricole, trying to minimize its Greek risks as concern lingers over the country's future in the euro area, entered exclusive talks with Athens-based Alpha Bank on October 1.

The sale will reduce Credit Agricole's net income in the third quarter by about €2 billion, the bank estimated.

Emporiki's loans exceed deposits, requiring Credit Agricole to provide funding to the unit and making the French bank the foreign lender with the most to lose should Greece leave the euro.

Credit Agricole's net funding to Emporiki was €2.1 billion at the end of September, and the capital injection and purchase of convertible bonds will "immediately" lower that by €700 million, said the bank, based in Montrouge, France.

Alpha Bank will cover the remaining funding gap in three installments, with the last payment due by the end of 2014.

Credit Agricole already provided €2.3 billion in capital to Emporiki in July following a request from the Bank of Greece.

The French bank, founded in 1894 as a lender to farmers, invested €2.2 billion in 2006 to buy a majority stake in Emporiki, the least profitable of Greece's top five banks at the time.

Since then, Emporiki has been unprofitable every year except 2007, with accumulated losses for Credit Agricole of about €5.7 billion at the end of June.

Bloomberg