95/547/EC: Commission Decision of 26 July 1995 giving conditional approval to the aid granted by France to the bank Crédit Lyonnais (Only the French text is authentic) (Text with EEA relevance)

• Articles: 5

Article 1

The aid contained in the recovery plan for Crédit Lyonnais in the form of a capital increase of FF 4,9 billion, the underwriting of the risks and costs associated with the assets transferred to the hiving-off structure (up to a maximum of FF 135 billion) and tax concessions inherent in the 'better fortunes` clause, the total net cost of which to the State, taking into account the revenue accruing to the State, is estimated at a maximum of FF 45 billion, is hereby declared to be compatible with the common market and with the EEA Agreement under point (c) of Article 92 (3) of the EC Treaty and point (c) of Article 61 (3) of the EEA Agreement.

Article 2

The aid referred to in Article 1 is authorized subject to France meeting the following conditions and commitments:

(a) it must ensure that all the recovery measures and all the arrangements provided for under the scheme described in Article 1 are implemented;

(b) it must not amend the conditions laid down in the recovery plan, except with the Commission's prior agreement. At all events, the 'better fortunes` clause may be transferred no earlier than at the time of the privatization of Crédit Lyonnais, and only at the market price; that price will be verified by independent assessments;

(c) it must ensure, given the size of the estimated overall cost of the scheme to the State of FF 45 billion, that the commercial capacity of Crédit Lyonnais is reduced by means of a cut of at least 35 % in its commercial operations abroad, including its European banking network, by the end of 1998 in accordance with the commitments given by France [. . .]. If that objective cannot be achieved by the deadline set without causing substantial losses that require the shareholder in question to provide further financial assistance in order in particular to ensure compliance with the Community solvency ratio, the Commission undertakes to examine the possibility of extending that deadline. If the costs of the scheme, estimated at FF 45 billion, are exceeded, it will be necessary to re-examine the scale of the reduction in the commercial operations of Crédit Lyonnais as accepted by [. . .];

(d) it must prevent Crédit Lyonnais from benefiting from a carry-over of tax losses in respect of the 1994 tax loss covered by the capital increase of FF 4,9 billion;

(e) it must prevent Crédit Lyonnais from repurchasing hived-off industrial and commercial assets, except at the price at which the assets were transferred to CDR or at the market price if that is higher than the price at which the assets were transferred to CDR, and at all events subject to an overall limit of FF 5 billion;

(f) it must prevent Crédit Lyonnais from sharing in any of the proceeds of sales from CDR;

(g) it must achieve a separation between CDR and Crédit Lyonnais as regards their managers, their administration and the system of monitoring and supervising the management of the hived-off assets;

(h) it must ensure that the committees responsible for managing the hived-off assets are independent of Crédit Lyonnais;

(i) it must eliminate any possibility of a carry-over of residual tax losses for years prior to 1995 for Crédit Lyonnais if, at the time of privatization, the 'better fortunes` clause is transferred;

(j) it must ensure that Crédit Lyonnais uses the proceeds of sales to restructure non-performing assets and activities;

(k) it must ensure that Crédit Lyonnais pays to SPBI the levy sums in accordance with the 'better fortunes` clause;

(l) it must pay to SPBI the proceeds of privatizing Crédit Lyonnais, particularly those deriving from the sale of the shares currently held by SPBI, and ask Parliament to endorse payment to SPBI of the proceeds of privatizing the remaining shares.

Article 3

The Commission has taken account of the French authorities' statement that their firm objective is to privatize Crédit Lyonnais and that the anticipated recovery should enable it to be ready for privatization within five years. Any deferment of privatization beyond five years will have to be notified to the Commission.

Article 4

The French authorities must cooperate fully in monitoring compliance with this Decision and must submit the following documents to the Commission every six months as from 1 March 1995:

(a) a detailed report on the application of the plan, together with the reports presented to Parliament;

(b) the balance sheets, profit and loss accounts, and reports of the directors of the companies involved in the hiving-off operation, namely OIG, CDR, SPBI and Crédit Lyonnais;

(c) a list of the hived-off assets that are liquidated or sold, with details of selling prices, the names of purchasers, and the names of the banks to which the selling instructions have been given;

(d) a detailed list of abandonments of CDR claims to be set against the participating loan granted by SPBI;

(e) a detailed list of the banking assets sold by Crédit Lyonnais outside the hived-off vehicle, with an evaluation, based on objective and verifiable criteria, of the reduction in its commercial operations abroad;

(f) detailed figures for Crédit Lyonnais's contributions to the hived-off vehicle in the form of a levy or dividends.

The Commission may ask for these documents and the implementation of the plan to be assessed by means of special audits.

Article 5

This Decision is addressed to the French Republic.

Done at Brussels, 26 July 1995.

For the Commission

Karel VAN MIERT

Member of the Commission

(1) OJ No C 121, 17. 5. 1995, p. 4.

(2) OJ No L 386, 30. 12. 1989, p. 14.

(3) Commission communication to the Member States on the application of Articles 92 and 93 of the EC Treaty and of Article 5 of Commission Directive 80/723/EEC to public undertakings in the manufacturing sector (OJ No C 307, 13. 11. 1993).

(4) Bulletin of the European Communities, No 9, 1984.

(5) OJ No L 322, 17. 12. 1977, p. 30.

(6) It is also possible in principle for the supervisory authorities to waive the 8 % ratio requirement temporarily provided that the required level is quickly restored.

(7) Commission communication to the Member States published in OJ No C 307, 13. 11. 1993, in particular point 37.

(8) OJ No C 368, 23. 12. 1994, p. 12.

(9*) Throughout the text, blanks between square brackets indicate business secrets which have been omitted.

(10) BNP reports that in the period from 1992, 1993 and 1994 French public banks, faced with losses of some FF 40 billion, received public fund injections of FF 25 billion and guarantees for hiving-off operations amounting to more than FF 180 billion.

(11) Inflation in France is currently 1,6 %.

(12) CL's long-term credit rating remains very low: BBB+ with the American rating agency Standard and Poor's, and A3 with Moody's.

(13) See below for detail.

(14) OJ No C 307, 13. 11. 1993, in particular points 35 and 37.

(15) The sample comprises 20 banks; two French, three Swiss, three German, two Dutch, four British, five American and one Japanese, and hence involves 80 observations (Source: IBCA).

(16) The French authorities have stated that the additional credit line of up to FF 10 billion was envisaged only as a precautionary measure and could not be established before 1 January 1998. On that date, the partial repayments already made by SPBI mean that the total amount used should, in any event, remain below the initial amount of FF 135 billion.

(17) In fact, the plan is to sell 80 % of the assets within five years. However, the difference for the purposes of the calculation below is only marginal.

(18) Since Groupe Thomson is controlled by the State, which holds some 50 % of the shares.

(19) Average rate adjusted to forecast profits in the business plan of percentages of 34 % and 60 %.