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French bank seeks U.S. ally
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March 18, 1999: 8:56 a.m. ET
Crédit Lyonnais in talks with Mellon, U.S. bank could become core shareholder
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LONDON (CNNfn) - France's Crédit Lyonnais, the state-owned bank slated for privatization this year, confirmed Thursday it is in the early stages of talks with Mellon Bank about a strategic alliance that would gel with the French bank's ambitions to ramp up its international business.
Credit Lyonnais was once France's number-one financial institution before bankruptcy forced it to seek a state-sponsored bailout. Chairman Jean Peyrelevade told Reuters the bank was in discussions with Pittsburgh-based Mellon as part of a broader search for partners both inside and outside France.
"We clearly need one or two partners in France and we need also, for completely different reasons, international partners to develop our international business," Peyrelevade said.
The comments came three days after the French government authorized a gradual privatization under which a core group of shareholders would secure just under one-third of the bank's total shares - or "less than a blocking minority." The government will retain a 10-percent stake and float the rest on the open market.
Ten percent of Crédit Lyonnais is already in private hands in the form of investment certificates that carry no voting privileges.
Earlier this week French newspapers reported that Crédit Lyonnais was in talks with Mellon. On Thursday, The Wall Street Journal said the discussions concerned an alliance in asset-management services that would broaden Mellon's presence in the distribution of mutual funds in Europe.
The Journal said Mellon could be among the core group of shareholders to acquire a 33 percent stake in the French bank in the first stage of a two-phased privatization process.
Officials at Crédit Lyonnais could not immediately be reached for comment Thursday.
Peyrelevade said that while it's too early to determine the outcome of the talks with Mellon, "clearly we hope we do" reach an agreement.
He added: "We have loads of discussions on an almost permanent basis with lots of financial institutions."
Separately, Peyrelevade said he expected the bank's earnings to rise substantially in 1999, assuming there's no reprise of the global financial crisis that hobbled the financial sector last year.
"If we don't have a new international crisis, hopefully not, normally our results should continue to improve dramatically in 1999," he said.
--from staff and wire reports
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