Commerzbank buys Credit Lyonnais stake

GERMANY'S COMMERZBANK yesterday said that its management board agreed to accept the French government's offer of a 4 per cent stake in the planned privatisation of Credit Lyonnais.

Martin Kohlhaussen, Commerzbank's chief executive, said the two banks planned to cooperate on operations in France, Germany and internationally, with the possibility of pulling Lyonnais into Commerzbank's existing network.

"The planned cooperation should be as extensive as possible," Commerzbank said. Dennis Phillips, spokesman, said the bank expected to pay about 350m euros for the stake and that it would not need to raise additional capital for the purchase.

Credit Lyonnais' non-voting shares, which account for 10 per cent of equity, were suspended from trading yesterday. The initial offering of the bank began at a 16 to 27 per cent discount to the price on the Parisian bourse.

The French government said on Saturday that shares in Credit Lyonnais, the country's fifth-largest bank, will be priced between 22.5 euros ($23.54) and 26.2 euros each in the initial offering of about 80 per cent of the company, valuing the state bank at 41-48 billion francs. Non-voting shares, which are to be swapped for shares in the IPO, closed last Friday at 31 euros.

Core shareholders with up to 4 per cent in the bank, such as Commerzbank, are to pay a premium of 1.9 per cent over the final share price. Core shareholders with a stake larger than 4 per cent must pay a 3.5 per cent premium.

The two banks could establish cooperation in their private banking operations, capital market operations and operations with mid-size firms.

The French government promised to sell Lyonnais, which teetered on the brink of bankruptcy, after a breakneck expansion plan in the early 1990s went wrong, in return for European Union approval for huge bailouts.