Banking and investment services: More state aid for Crédit Lyonnais?

United Kingdom

The French government has just submitted a restructuring plan for State-owned Crédit Lyonnais. This is the third time the Commission has been asked to approve State aid to Crédit Lyonnais since the summer of 1995.

The new plan aims to neutralise a bad loan made in 1995 to the Etablissement de Financement et de Restructuration which is carrying out the existing restructuring plan for Crédit Lyonnais. This loan was made at variable interest rates as low as 85% of the market average and could cost the bank about 3bn FF (£310m) this year.

Unlike the draft plan submitted by the previous government, this plan does not envisage the privatisation of the bank. The first plan allowed for a 45bn FF (£4.6bn) injection of State aid in return for a "slimming cure", designed to slash 35% of the Crédit Lyonnais banking network by the end of 1998.