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CL given license to privatize
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March 15, 1999: 5:21 a.m. ET
French Finance Ministry gives go-ahead for privatization of Crédit Lyonnais
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LONDON (CNNfn) - The French government on Sunday laid out a timetable for the long-awaited privatization of Credit Lyonnais, the onetime supremo of French banking laid low in recent years by over-expansion and bad loans.
In a decree seen as a sneak preview of what is to come, the French Finance Ministry officially authorized the privatization of the ailing state-owned bank, which at its pinnacle in the early 1990s was one of the world's largest banks, with assets of around 2 trillion francs.
That was before a near freefall in the bank's fortunes, marked by a record loss of 12.1 billion francs ($2 billion) in 1994. Crédit Lyonnais resumed profitability in 1995 after a state-led bailout that forced the bank to forfeit a percentage of its profits to the state every year until 2014.
In 1998, Crédit Lyonnais bought back this repayment clause in the run-up to privatization. The estimated losses from the bailout are 120 billion francs; Crédit Lyonnais has also announced its intention to continue cutting its workforce, at the rate of 1,000 jobs a year, over the next three years.
The decree published Sunday calls for a flotation of shares in Crédit Lyonnais stock before the end of June. Ten percent of the bank's capital is already in private hands through investment certificates which carry no voting privileges.
The French government is expected to establish a core group of shareholders who would control less than a third of the total shares, or "less than a blocking minority," in the decree's words, Reuters reported.
The government would retain a retain a 10 percent stake and float the rest on the market.
The government's privatization plans for Crédit Lyonnais were dealt a setback last week after Banque Nationale de Paris launched a surprise twin takeover bid for Paribas and Société Générale, which had earlier unveiled plans to fuse their own operations.
Paribas and SocGen lashed out at BNP in the wake of the bid, calling it unfriendly and vowing to pursue their own merger plans.
Should BNP's bid defy the odds and succeed, however, it would leave Crédit Lyonnais facing a slim field of candidates for its shares inside France.
Crédit Lyonnais is scheduled to publish its earnings March 18.
--From staff and wire reports
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Crédit Lyonnais
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