WARY of seeing France's embattled Credit Lyonnais getting any more subsidies, the European Commission said yesterday it would react quickly to a new French request to rescue the bank.
European Competition Commissioner Mr Karel Van Miert is to hold a news conference on the issue today. Both the French finance ministry and the Commission would not elaborate on the request for aid.
There has been mounting speculation that Credit Lyonnais, once the world's largest bank outside Japan, would need a third salvage plan to avoid an humiliating plunge back into the red. The French bank owns 53 per cent of Woodchester Bank in Ireland.
The French bank was bailed out by the French state in 1992. In 1995, the Commission agreed to a multi-annual plan involving maximum subsidies of 45 billion francs (£5.4 billion) on the condition that it shared part of the restructuring costs and sold 35 per cent of its foreign assets.
It particularly insisted that the bank make a below-market rate loan to finance the state-backed vehicle CDR that took over 130 billion francs of its ailing assets.
Any change to the 1995 plan must get the EU's green light.
Commission sources said there was outrage at reports of yet another rescue plan for the bank and pledged that it could only be approved under very tough conditions.
This could involve the selling of more assets than initially agreed in 1995, an official said, referring in particular to the bank's profitable German subsidiary, Bank Fuer Gemeinwirtschaft (BFG).
"This is truly scandalous and should only be allowed if Credit Lyonnais agrees to sell its German unit," the official said.
The bank is expected to announce half-year losses tomorrow unless it secures changes to last year's plan that would cancel retroactively to last January charges incurred in financing the loan to CDR, a Paris source close to the talks said on Monday.
The bank accumulated losses of 21 billion French francs between 1992 and 1994. It eked out a 13 million franc profit in 1995 thanks to the two consecutive rescue plans.
