FRENCH taxpayers will have to meet a final bill of at least €16.8 billion (£11.5 billion) to wipe out the debts left by Crédit Lyonnais bank when it was state-owned.
The figure emerged as the French Government admitted that it had failed to fulfil its pledge to recover the losses of the bank that became known as Crazy Lyonnais.
According to officials in Paris, the State has recouped virtually none of the money — leaving taxpayers to pay out.
“The Crédit Lyonnais affair is above all the consequence of the end of the real estate bubble and the errors of a state bank. It’s impossible to recover these funds,” an official at the Finance Ministry said.
The total debts run up by Crédit Lyonnais between 1988 and 1993, which were revealed by Le Monde yesterday, represent four months of income tax for the French national budget.
Advertisement
The bank dug itself into one of the deepest holes in the history of European finance through a wide-ranging investment programme designed to turn it into a global powerhouse under the regime of the late President Mitterrand.
It approved a huge variety of ventures, which included property, insurance and the ill-fated purchase of the Metro- Goldwyn-Mayer film studio in Hollywood. When Europe’s economy soured at the start of the 1990s, Crédit Lyonnais was left with a catastrophic portfolio of bad loans.
In 1995 these were transferred to a state body, the Consortium de Réalisation, which was charged with a salvage operation to enable the privatisation of the bank in 1999.
Court cases arising from the scandal are continuing. Last year the French State had to pay almost $1 billion after a judge in California ruled that Crédit Lyonnais had acted illegally over the 1991 purchase of the US insurer, Executive Life.