Brussels
The European Commission yesterday gave its blessing to a fresh rescue of French bank Credit Lyonnais, launching the biggest bailout in corporate history.
The decision, which ends years of bitter battles between the European competition watchdog and successive French governments, makes equally unprecedented demands on the bank - to privatise and divest of a huge asset portfolio.
''The total of the aids granted by the French state to Credit Lyonnais is within the range of Ffr102bn to Ffr147bn (#10.5bn-#15.1bn), an amount of aid in favour of a single company which is unique in the history of the European Union,'' the Commission said in a statement.
This includes two previous rescue packages agreed in 1994 and 1995.
In return Lyonnais must sell most of its European banking assets outside France, reduce domestic branches to 1850 by the year 2000 from 2100 now and be privatised without discriminating against foreign investors.
The bank will be allowed to keep some operations in the financial centres of London, Zurich, Frankfurt and Luxembourg, but to compensate that it must sell an equivalent amount of assets in Asia and North America.
The Commission did not detail the businesses which must be sold, so as not to hamper the sales.
In total, since 1994, Lyonnais will have sold more than Ffr620bn (#64bn) worth of assets, reducing its balance sheet by a third.
European Competition Minister Karel Van Miert was confident this would be the last time the bank would knock at the door of the Commission, which must review all subsidies granted to businesses to avoid distortions of competition, saying he had faith in its future viability.
But this depended to a large extent on finding solid partners, Van Miert said, tiptoeing around the sensitive issue of privatisation which poisoned talks with Paris for months.
The French state, which owns directly or indirectly more than 80% in the bank, must reduce its stake to less than 10%, which could be done by combining a public offering with a private placement, he said.
The Commission was advised by Lehman Brothers. - Reuters.
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