Article 1
(1) The measures submitted to the Commission in September 1996 and the measures in the Crédit Lyonnais restructuring plan which was laid before the Commission in July 1997, taking the form of a neutralization of the loan to EPFR, a decision not to proceed with the zero-coupon bond, and the coverage by the State of additional losses made by CDR and EPFR, as amended by the French authorities in accordance with this Decision, constitute State aid caught by Article 92(1) of the EC Treaty and Article 61(1) of the EEA Agreement. The aid, which is additional to the aid authorized by the Commission in Decision 95/547/EC and the Commission decision of 25 September 1996, has a value between FRF 53 and 98 billion. This additional aid may be declared compatible with the common market under Article 92(3)(c) of the EC Treaty and with the EEA Agreement under Article 61(3)(c) of the Agreement, provided that France complies with the undertakings set out in paragraph 2 and the conditions set out in paragraph 3. (2) France gives the following undertakings: (a) France undertakes to transfer Crédit Lyonnais to the private sector no later than October 1999, in accordance with an open, transparent and non-discriminatory procedure. The process can begin in 1998, when a privatization order will be made, and will take place in several stages. It will in any event be launched before 1 March 1999. The State's holding in the capital of Crédit Lyonnais will be reduced to no more than 10 %, and the State will no longer be Crédit Lyonnais's lead shareholder. (b) As a quid pro quo to offset the aid, Crédit Lyonnais will sell off or liquidate assets worth FRF 620 billion on its balance sheet at 31 December 1994. The reduction will be spread over the whole of its assets in Europe outside France, with the exception in particular of its business in London, Luxembourg, Frankfurt and Switzerland. Crédit Lyonnais will be entitled to manage accounts for the purpose of supplying payment and disbursement services in the euro zone. The preservation of these strategic businesses will be offset by other assets in France and in the world. This undertaking supplements the undertaking given on 18 July 1995, which called for a worldwide reduction of 35 %, equivalent to 50 % in Europe; that undertaking is confirmed. The balance of those sales is to be completed by 31 December 1998. The worldwide reduction of FRF 620 billion must have taken place by the time of privatization. Either or both of these dates may be postponed by a year as a result of market factors duly substantiated to the Commission. (c) Crédit Lyonnais will reduce its network in France, which will not exceed 1 850 commercial outlets in the year 2000 for the parent company and its retail banking subsidiaries. This number includes outlets for personal, business and corporate customers. (d) To ensure successful privatization within the time allowed, the better fortunes clause and the effect of the partial neutralization of the loan after 1999 will be valued by an independent valuer, and sold to the market indirectly via an issue of Crédit Lyonnais shares to be subscribed by EPFR, which will then sell them in the course of the privatization process. Before the share issue the valuation will be forwarded to the Commission. (e) In order to maintain the restraining effects on Crédit Lyonnais's growth potential of the better fortunes clause and of the difference in rates of interest on the loan to EPFR, and to ensure that Crédit Lyonnais's development is controlled by comparison with those of its competitors, (i) 58 % of its net profits up to and including the financial year 2003 will be distributed as dividends; (ii) the carryover of losses for tax purposes will come to an end as soon as the better fortunes clause is redeemed; (iii) the growth in its consolidated balance sheet, at constant consolidation limits and constant exchange rates, will be subject to a ceiling of 3,2 % per annum between the end of 1998 and the end of 2001, and until 2014 its solvency ratios will be maintained at no less than their level at the end of 2001, save in exceptional circumstances duly substantiated to the Commission and acknowledged by it. (f) The performance of all the undertakings set out in points (a) to (e) may be verified by an independent expert each year until the completion of the asset sales. The French authorities will send the Commission a quarterly progress report and a detailed six-monthly report on the application of the plan. France has sent the Commission a confidential list of the sales and closures referred to in point (b), by letter dated 13 May 1998. (3) To ensure that the aid is compatible with the common market the French Government shall ensure that the following conditions are complied with: (a) Implementation All the undertakings and other measures provided for in this Decision and the measures provided for in Decision 95/547/EC which have not been changed in this Decision must be implemented; they may not be changed without the Commission's prior consent. (b) Procedure for the sale of assets Sales of Crédit Lyonnais subsidiaries and branches shall be such as to reduce the scope of Crédit Lyonnais's consolidated accounts net of previous sell-offs, and shall be irrevocable. They shall be carried out in accordance with transparent procedures which are open to any potential buyer, French or foreign. The conditions may not include any clause which might impose unacceptable limitations on the number of potential candidates or which is tailored to one or other potential candidate. The choice of buyers shall be made with a view to maximizing revenue from the sale. The proceeds of the sale shall be used entirely to finance Crédit Lyonnais's restructuring plan. (c) Redefinition and operation of the mechanism to restrain Crédit Lyonnais The valuation of the discounted value of the burden of refinancing on Crédit Lyonnais from 2000 to 2014 in respect of the loan it has given EPFR at 15 % below the money market rate, the redrafting of the better fortunes clause, and the valuation of the clause shall be carried out by an independent valuer; the valuer's report shall be forwarded to the Commission, and the Commission must approve its conclusions before any change in the value of the clause and before Crédit Lyonnais issues the shares reserved for the State. (d) Monitoring of this Decision (i) The French authorities shall submit a progress report every three months until 31 December 2000. The report shall give a detailed account of the sales and closures agreed in connection with this Decision, showing the date of the sale, the book value of the assets at 31 December 1994, the price paid, and any capital gain or loss. The first report shall be due on 1 October 1998. The subsequent deadlines shall be 1 January 1999, 1 April 1999 and 1 July 1999. (ii) Crédit Lyonnais's six-monthly and annual reports shall be sent to the Commission immediately they are approved by the board of directors of the bank, along with a review of progress with the bank's business plan. (iii) The Commission shall have unrestricted access to information throughout the duration of the plan. It may with the consent of the French authorities seek explanations and clarification from Crédit Lyonnais direct. The French authorities and Crédit Lyonnais shall lend their full cooperation in any enquiries that may be requested by the Commission or by a consultant acting for it. (iv) The Commission shall be kept constantly informed of the steps taken to privatize Crédit Lyonnais. The authorities shall send it in advance any information which might help to establish that the privatization is being carried out in accordance with open, transparent and non-discriminatory procedures. (v) Any postponement of the dates of sales and closures to be carried out in accordance with the mechanisms set out above in the undertakings of the French authorities at point 2(b) in this Article must have been approved in advance by the Commission. These undertakings refer exclusively to the dates of sales and closures of assets, and leave unchanged the undertaking to privatize Crédit Lyonnais, which must have been completed in any event by October 1999 at the latest. (e) Decision 95/547/EC The French authorities shall comply with the undertakings in Article 4 of Decision 95/547/EC until the end of the hive-off operation.