The cavalier bank may still have the last laugh

City & Business

EUROPE'S biggest banking scandal, Credit Lyonnais (or should I say Debit Lyonnais), is finally coming to an end, and the French government can look forward to ridding itself of one of the biggest financial headaches in the history of the continent.

Or can it? Last week's 78-page agreement between the European Commission and the French government in order to approve a bail-out of between Fr100bn (pounds 10bn) and Fr150bn came as no surprise. As one Commission official put it, "the bigger the aid, the more likely we are to approve it". The Commission may have driven a tough bargain with Paris but in the end, no one expected Brussels to outlaw government help. If they had, the financial system would have collapsed along with its biggest bank. The exact amount of CL's losses, run up by a corrupt and profligate management, are still not known.

Paris also can claim some victory in its negotiations with Brussels, managing to rebuff the Commission's earlier demands that it should sell all its European assets as a condition for approval for the aid. The recent horse-trading between the Commission and the bank went along these lines. If you want aid, you must sell off your business in New York. CL replied that to sell off its assets in the Big Apple would damage its international standing. Then the Commission suggested the bank sold off its London assets, including the securities house, CL Securities Europe. The bank was having none of that either, London being the important financial centre that it is. So the likely candidates for auction will be retail operations in Spain, Belgium and Germany. These are profitable businesses, and given the drive towards banking consolidation, should fetch good prices, when banking assets are being bought and sold on historically high multiples. In total, the French government has pledged to sell Fr620bn of CL's assets. That leaves privatisation of the rest of the bank, which the French government pledged would happen by the end of October next year. A lock, stock and barrel sale to a foreign investor seems unlikely. In addition, whoever buys the bank has to deal with the staff. Around 4,000 of them went to Brussels recently to protest against privatisation plans. When Sir Brian Pitman, chairman of Lloyds TSB told the French press he "would love to buy" CL, he also made it clear that France would have to change its generous employment laws. Fat chance, Sir Brian. A more likely scenario appears to be a traditional flotation, with just a few core investors to maintain stability. Insurance company Allianz of Germany has already said it would like 10 per cent of CL. A couple more offers like that and the French government will be laughing - all the way to the bank.

PolyGram's cliffhanger

THE most ridiculous investments made by CL in its dark period was the purchase of a Hollywood studio, MGM. The investment turned sour, and the bank later sold MGM back to its original owner at a loss of pounds 700m. Although it was an Italian, Giancarlo Paretti, who purchased MGM with CL's cash, the acquisition was motivated partly by a French desire to beat the Americans in the big screen game. Now, seven years on, Hollywood may be about to swallow Europe's biggest cinema hope, PolyGram. Seagram's announcement last week that it was in talks with the Dutch media giant sent shivers down the spine of the defenders of European culture who gathered last week in Cannes for the annual film festival. Not least because the company was the European film industry's most vocal and powerful lobbyist in Brussels.

PolyGram has spent $1.2bn since 1991 on establishing Europe's biggest film distributor only to face the threat of it being bought by Hollywood. Seagram, after all, owns Universal Studios, which like most of Hollywood, is desperately searching for fresh talent. The likelihood is that Universal would simply absorb PolyGram. That would be a disaster for Europe and the renaissance of its film industry. PolyGram has financed a number of European hits, including Four Weddings and a Funeral and Bean which between them grossed around $500m, enough cash to encourage PolyGram to move on to bigger budget films including a planned $40m follow-up to Four Weddings. The film was popular worldwide precisely because it was "sooooo British". The popular corporate argument in the movie industry is that money has no nationality, so it doesn't matter who finances a film. I beg to differ. The paymasters will always, in the end, call the tune - albeit a theme tune. If Polygram goes to Hollywood, it's going to take lashings of lottery money for film franchises for the European and British film industry to recover from the loss.

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before