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.

PROMOTED VIDEO
Arts and Entertainment
Babysitter Katie and Paul have terse words in the park
tvReview: The strength of the writing keeps viewers glued to their seats even when they are confronted with the hard-hitting scenes
News
i100
Arts and Entertainment
American singer, acclaimed actor of stage and screen, political activist and civil rights campaigner Paul Robeson (1898 - 1976), rehearses in relaxed mood at the piano.
filmSinger, actor, activist, athlete: Paul Robeson was a cultural giant. But prejudice and intolerance drove him to a miserable death. Now his story is to be told in film...
Sport
England’s opening goalscorer Alex Oxlade-Chamberlain battles with Scotland’s Charlie Mulgrew
FootballEngland must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Life and Style
Make-up artists prepare contestants for last year’s Miss World, held in Budapest
fashion
Sport
Wigan Athletic’s back-of-the shirt sponsor Premier Range has pulled out due to Malky Mackay’s arrival
Football
News
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

Ampersand Consulting LLP: Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Carlton Senior Appointments: Director, Private Bank - San Francisco, CA

$175 - $200 per annum, Benefits: full benefits: Carlton Senior Appointments: P...

Carlton Senior Appointments: San Diego, CA – Tier 1 House - Senior MD FA

Not specified: Carlton Senior Appointments: Senior MD Financial Advisor - San ...

Day In a Page

US immigration: President Obama ready to press ahead with long-promised plan to overhaul 'broken system' - but will it get past a Republican-controlled Congress?

Immigration: Obama's final frontier

The President is ready to press ahead with the long-promised plan to overhaul America's 'broken system' - but will it get past a Republican-controlled Congress?
Bill Cosby rape allegations explained: Why are these allegations coming out now? Why didn’t these women come forward earlier? And why has nobody taken legal action?

Bill Cosby rape allegations explained

Why are these allegations coming out now? Why has nobody taken legal action? And what happens next for the man once thought of as 'America's Dad'
Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain

You know that headache you’ve got?

Four years of excruciating seizures caused by the 1cm tapeworm found burrowing through a man's brain
Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?

Scoot commute

Travelling to work by scooter is faster than walking and less sweaty than cycling, so why aren’t we all doing it?
Paul Robeson: The story of how an American icon was driven to death to be told in film

The Paul Robeson story

How an American icon was driven to death to be told in film
10 best satellite navigation systems

Never get lost again: 10 best satellite navigation systems

Keep your vehicle going in the right direction with a clever device
Paul Scholes column: England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil

Paul Scholes column

England must learn to keep possession and dictate games before they are exposed by the likes of Germany and Brazil
Michael Dawson: I’ll thank Spurs after we win says defender as he prepares to return with Hull

Michael Dawson: I’ll thank Spurs after we win

Hull defender faces his struggling former club on Sunday ready to show what they are missing. But he says he will always be grateful to Tottenham
Frank Warren column: Dr Wu has big plans for the professionals yet he should stick to the amateur game

Frank Warren column

Dr Wu has big plans for the professionals yet he should stick to the amateur game
Synagogue attack: Fear unites both sides of Jerusalem as minister warns restoring quiet could take 'months'

Terror unites Jerusalem after synagogue attack

Rising violence and increased police patrols have left residents of all faiths looking over their shoulders
Medecins sans Frontieres: The Ebola crisis has them in the headlines, but their work goes far beyond West Africa

'How do you carry on? You have to...'

The Ebola crisis has Medecins sans Frontieres in the headlines, but their work goes far beyond West Africa
Isis extends its deadly reach with suicide bombing in Kurdish capital

Isis extends its deadly reach with suicide bombing in Kurdish capital

Residents in what was Iraq’s safest city fear an increase in jihadist attacks, reports Patrick Cockburn
Underwater photography competition winners 2014 - in pictures

'Mysterious and inviting' shot of diver wins photography competition

Stunning image of cenote in Mexico takes top prize
Sir John Major: Negative West End portrayals of politicians put people off voting

Sir John Major hits out at theatres

Negative West End portrayals of politicians put people off voting
Kicking Barbie's butt: How the growth of 3D printing enabled me to make an army of custom-made figurines

Kicking Barbie's butt

How the growth of 3D printing enabled toy-designer to make an army of custom-made figurines