TROUBLED state controlled French bank Credit Lyonnais will write to its workers next month asking them to accept a pay cut as part of an agreement to save 1,100 jobs, a spokesman said yesterday.

The "solidarity contribution", amounting to 0.6 per cent of employees gross annual wages, was part of a deal in December with unions aimed at salvaging some of the 5,000 jobs due to be cut.

It is one of the first times such a large enterprise in France has tested the "solidarity" of its employees on a company wide basis in such a fashion.

The job cutting programme is part of the bank's struggle to improve profitability and ready itself for privatisation.

The bank, which has 34,700 employees in France, and owns 53 per cent of Woodchester Bank in Ireland, had losses of 21 billion francs (£2.39 billion) between 1992 and 1994 from a disastrous expansion spree before edging back into profit last year.

The bank has been rescued twice by the state and it is expected to be bailed out a third time in 1997 to boost its solvency ratios to prepare it for sale.

Financial analysts have said the bank must trim staff to find a buyer. In November, US investment bank, Goldman Sachs, adviser to the French government, was told by potential purchasers that they would only look at it if they had a free hand to cut jobs.

The government wants to privatise Credit Lyonnais as soon as possible but the bank has said it is unlikely to be in a fit state to be sold until mid 1998.

The bank, which had pledged to submit its privatisation plan to the government before year end, is believed to have done so.