Credit Lyonnais hits further bad debt snag
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Your support makes all the difference.PARIS (Reuter) - Last-minute haggling between the French government and the chairman of Credit Lyonnais over aid to prop up the ailing state-owned bank delayed the publication of its first-half results yesterday.
The bank insisted that it had no differences with its principal shareholder and said a delay of several days was needed simply to tie up various details.
But bank sources said Jean Peyrelevade, the chairman, suddenly called off the board meeting because he was at odds with the government over a new package to mop up the bank's red ink.
Appointed by the new conservative government last year to nurse Credit Lyonnais back to health, Mr Peyrelevade has been insisting for months that although the bank has already made massive provisions for bad debt, much more is still needed.
According to one report this week Credit Lyonnais needs to provide Fr15bn to Fr25bn ( pounds 1.85bn- pounds 3.1bn) this year, compared with 1993's Fr17.8bn.
Last year the bank suffered a loss of Fr6.9bn, one of the biggest in French corporate history, as a cycle of risky credit ventures and loan losses took their toll. Analysts expect a loss of as much as Fr5bn for the first half of this year alone.
Such a loss would leave the bank dangerously short of capital and force the government to inject fresh cash.
They said the state could set up a shell company, which would take doubtful loans off the bank's books, as it did with a package of property exposure earlier this year.
Last year's loss and the cost of the rescue package unleashed uproar over Credit Lyonnais's past.
Many accused the former socialist government of encouraging ill-considered lending and breakneck investments, including a loan for the purchase of the MGM Hollywood studio in 1990.
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