Credit Lyonnais chairman blames managers' mistakes

THE NEW chairman of the French state-owned Credit Lyonnais yesterday blamed the bank's enormous losses on mismanagement and said a government inquiry was unlikely to trace the disaster back to links with the former Socialist administration.

Credit Lyonnais financed the loss-making takeover dealings of the Socialist deputy Bernard Tapie, the purchase of the Metro-Goldwyn-Mayer film studios by Giancarlo Parretti - an Italian businessman with links to the French Socialist Party - and was one of the biggest lenders to Robert Maxwell.

In France there have been claims that the bank's relationship with the Socialist government led it into many of its disastrous loans.

Jean Peyreleyade, the chairman installed in November to replace Jean-Yves Haberer, said he did not think there had been any kind of political exploitation of the situation of Credit Lyonnais. It was simply a case of mistakes of management together with bad luck when the recession hit. Losses in 1993 were Fr6.4bn ( pounds 770m).

Mr Peyreleyade said he believed a government inquiry launched last month into Mr Haberer's stewardship of the bank would find nothing other than the mismanagement that had been seen in many private sector bodies elsewhere, such as Lloyd's of London and Metallgesellschaft and Schneider in Germany.

But he admitted that he had no explanation of why, under Mr Haberer, the bank had decided to buy heavily into French industry, a policy now being unwound. Mr Peyreleyade said the bank hoped at least to halve its 20 per cent shareholding in the French steel industry and swap some other holdings in state industries for more liquid investments. He expected disposals of Fr10bn this year and the same next.

The bank would accept dollars 2.5bn now for MGM - the amount it has sunk into the business - but did not expect to sell before spring 1996. The price would depend on performance.

Mr Peyreleyade also said Credit Lyonnais was unlikely to be privatised before 1996. It first had to raise its 'tier one' equity capital to about 6 per cent of its loan book from 4.4 per cent now. A rights issue to all shareholders late this year was likely to follow a share issue to the government this spring.

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