Credit Lyonnais may get state help
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Your support makes all the difference.CREDIT LYONNAIS, the French bank hit by heavy losses on property lending, could receive a capital injection from the government of Fr3bn to Fr4bn (pounds 340m to pounds 450m), according to reports in France yesterday.
But Edmond Alphandery, the French Economy Minister, told a press briefing that the recapitalisation exercise would not happen before the end of March, when the state-owned bank published its yearly results. Ministry officials refused to discuss the size of the cash injection.
Credit Lyonnais said: 'These are matters between Credit Lyonnais and its shareholder, the state.'
The French daily La Tribune Desfosses said the government wished to limit the cash to Fr4bn because of budget constraints and fear of antagonising the European Commission. There were also fears of a hostile reaction from competitors among the French commercial banks such as Societe Generale.
The rescue plan also involves asset sales and the transfer of between Fr25bn and Fr30bn of non-performing property loans to a shell company to clean up the Lyonnais balance sheet.
Losses would ultimately be repaid from the proceeds of Credit Lyonnais's sale to the public, but a date has not yet been set for privatisation.
Initially Credit Lyonnais wanted to get rid of Fr40bn of non-performing loans, but the government asked the bank to revise the amount down.
In 1992 Credit Lyonnais made provisions for bad loans of Fr14.2bn, and it is thought these could reach Fr20bn for 1993.
The recapitalisation follows a dash for growth by Credit Lyonnais under its former chairman Jean-Yves Haberer, who was replaced by the government last year after the chickens came home to roost in the form of big losses. Credit Lyonnais, which owns the former Laing & Cruickshank in the City, may have lost as much as Fr8bn last year.
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