Credit Agricole, the French bank, today became the country's biggest casualty of the credit crisis after writing down an additional €1.3 billion (£1 billion) which sent Calyon, its corporate and investment banking arm, plunging into a loss for the first half.

The writedown, against Calyon's exposure to downgraded debt and highly structured credit products, means the French bank has written down some €6.5 billion of toxic debt securities since the credit crunch began last year.

The figure is comfortably higher than domestic rivals such as BNP Paribas, Natexis and Societe Generale, although lower than Europe's biggest crunch victim, UBS, which has written down $43 billion.

Credit Agricole considered buying SocGen earlier this year after it was gripped by the €4.9 billion rogue trading scandal, involving Jerome Kerviel.

The bank, which has also run the slide rule over a bid for Alliance & Leicester, the UK mortgage lender, is currently putting the finishing touches to a back-to-basics restructuring plan for Calyon, which employs thousands across Europe.

It is understood that some job cuts are on the cards when the finalised proposal is unveiled next month, although the strength of local unions in France means wholesale redundancies are unlikely.

In June, the bank successfully carried out a €5.9 billion rights issue to shore up the strength of its balance sheet.

Calyon is likely to decide to concentrate on its known expertise, which includes fixed income underwriting and broking, as well as project and infrastructure finance for ships and planes.

Georges Pauget, chief executive at Credit Agricole, said: "In corporate and investment banking, which is still suffering from the impact of the worldwide financial crisis, as announced at the time of our capital increase, we have initiated important steps to cut costs and to refocus the business."

A spokesperson declined to comment on the outcome of the review, scheduled to be unveiled on September 10.

Today's writedown means that Credit Agricole recorded after-tax profits of just €76 million in the second quarter, a 94.1 per cent drop on the €1.3 billion of the same period the previous year. Over the first half, profits fell 75.5 per cent to €968 million.

Calyon's loss hit €855 million for the second quarter and €1.65 billion for the first half.

The struggles at the investment bank obscured a healthier performance elsewhere at Calyon.

Operating profits at the domestic retail bank rose 8.9 per cent to €631 million during the first half, with the international arm up 37.4 per cent at €553 million.

Operating profits from asset management, insurance and private banking dropped 8.5 per cent to €1.2 billion, but the bank maintained that this was an "extremely resilient" in the face of the downturn.

Shares were 4.24 per cent higher, up €0.56 at €13.77.

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