Sun, May 18, 2003 - Page 11 News List

France approves merger of Credit's Agricole, Lyonnais


France's highest court on Friday removed the final regulatory hurdle to Credit Agricole SA's planned merger with Credit Lyonnais SA, a deal to create the country's largest retail bank.

Ending five months of wrangling on the deal, the Council of State confirmed approval of the 19.5 billion euro (US$22.5 billion) merger, but turned away conditions imposed by France's main banking regulator.

In its verdict, the court ruled that the regulator, CECEI, had the right to approve the merger, but had overstepped its bounds by imposing conditions on it.

Also Friday, France's stock market watchdog said Credit Agricole's 56-euro (US$64.59) per share offer to Credit Lyonnais shareholders will close May 26 -- three months later than the banks had intended.

A counterbid could still be made, but that now seems unlikely after BNP Paribas SA, a rival suitor for Credit Lyonnais, said this week it favors selling its 16.2 percent stake in Credit Lyonnais.

In a landmark ruling in March, the CECEI approved the Credit Agricole-Credit Lyonnais merger, but set conditions that included the sell-off of 85 branches across France and a freeze on opening outlets in one third of the country's 95 administrative districts.

French insurance regulators and the US Federal Reserve Bank quickly approved the merger, but the tie-up was delayed because the CECEI decided to launch a six-week probe into competition concerns.

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