Set against the French state- owned bank, Barclays looks a model of bankerly care. Not only has Credit Lyonnais produced peak losses more than twice as big, the scale of the disaster is so serious that it has also suffered the embarrassment of investigation by the French banking commission and by government auditors.
The conservative government is now investigating too after a request from the former chairman. Its focus is relations between management and socialist ministers. There could be damaging revelations since conservatives suspect that Credit Lyonnais was a poodle of the former socialist regime.
In theory, the rescue announced last month, including a Fr4.9bn capital injection and the establishment of a state-backed workout company for Fr40bn of bad debts, should be the end of the matter. But is it?
At a briefing in London, Jean Peyrelevade, the new chairman, said he thought all the disasters had been accounted for and the balance sheet was 'seriously clean', but he was unwilling to make any cast-iron promises.
French banks have begun to suffer heavily from much the same property crash that hit British banks two years ago. Low interest rates saved the US banking system, allowing it to rebuild its capital, and they also played a large part in shoring up British banks after we left the exchange rate mechanism, by stabilising property prices.
French banks have no such help and could still suffer considerable damage in the property market.
Mr Peyrelevade has a far better track record as a manager than his unfortunate predecessor. He claims to be able to say no and thrice no to political pressure to lend to the wrong people. But he comes from the same elite civil service background as most of the heads of French state industry.
It is a system of management patronage whose flaws have been cruelly exposed by the recession. The quicker the bank is sold off the better for its credibility and health. The two-year wait to privatisation is probably too long.Reuse content