Crédit Agricole takeover of Crédit Lyonnais approved

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In March 2003, France's Banking and Investment Committee authorised a takeover of Crédit Lyonnais by Crédit Agricole, on the proviso that 85 branches be sold off and no new branches be opened in certain areas. Trade unions are concerned by the impact of the takeover on jobs, particularly at Crédit Lyonnais.

Following an announcement by Crédit Agricole of its intention to take over Crédit Lyonnais (FR0301101N), the Banking and Investment Committee (Comité des établissements de crédit et des entreprises d'investissement, CECEI), gave the green light for the two banks to merge on 13 March 2003, on the condition that the new entity: sells off 85 branches in 18 départements of France during the current year; and places a moratorium on opening new agencies in 32 départements for a period of two years.

In making its decision, the CECEI particularly focused on retail banking operations. Based on figures from Banque de France (France's central bank), the Committee concluded that the new entity will have to sell off agencies in those départements where merging the two banks will automatically give the new firm a 45% market share and where no competing entity is 'within a 10-minute drive'. In addition, in départements where the new entity has between a 40% and 45% market share, it will have to observe a freeze on opening new branches.

While the actual purchase - which will not be complete until early May 2003 - of Crédit Lyonnais stock by Crédit Agricole does not appear to pose any particular problem, many other issues remain in flux. The legal structure and organisational chart of the new entity have yet to be settled. Quite apart from deciding how executive and management positions are to be shared among Crédit Agricole and Crédit Lyonnais - no easy task - the current legal and authority structure at Crédit Agricole complicates the amalgamation process. Crédit Agricole is a mutual-type society, whose publicly listed core entity, Crédit Agricole SA, is 70% owned – through a holding company - by the various regional Crédit Agricole units. The latter manage a network of 7,500 branches throughout France, in direct competition with Crédit Lyonnais’ 1,800 branches, which will now be either directly or indirectly managed by Crédit Agricole SA under the Crédit Lyonnais banner.

Crédit Agricole’s management is making every effort to reassure the staff of both companies and has said that there will be no redundancy plan. It has forecast that the creation of the new entity, which will merge the national and international operations of both existing banks, will result in 4,600 job losses over a three-year period, but states that 'natural wastage' in both banks combined is already running at 4,500 employees per year. The details of what will happen to the 85 branches slated for closure has, however, not yet been settled

Trade unions at both banks are concerned by the impact of the takeover on jobs, particularly at Crédit Lyonnais. The banking sector federation of the General Confederation of Labour-Force ouvrière (Confédération générale du travail-Force ouvrière, CGT-FO) has formally asked the Council of State (Conseil d'Etat) to suspend and annul the CECEI decision. The French Democratic Confederation of Labour (Confédération française démocratique du travail, CFDT), while expressing its opposition to the conditions imposed by CECEI, does not wish to challenge its powers on issues of competition. The Crédit Lyonnais section of the General Confederation of Labour (Confédération générale du travail, CGT), which was due to give its official reaction in April, has stated that it sees the CECEI decision as imposing a redundancy plan without workforce consultation. The National Banking Union (Syndicat national des banque, SNB) affiliated to the General Confederation of Professional and Managerial Staff-French Confederation of Professional and Managerial Staff (Confédération générale de l’encadrement-Confédération générale des cadres, CFE-CGC) has decided to wait until the stock transaction is completed and until further information on the new entity’s make-up is forthcoming, while the French Christian Workers’ Confederation (Confédération française des travailleurs chrétiens, CFTC) was to present its position in April.

As has been the case with a current overhaul of the Banque de France network (FR0303102N), local and rural elected officials are keeping a close eye on the impact of the Crédit Agricole takeover of Crédit Lyonnais. They are particularly well represented in the upper chamber of the French parliament, the Senate. Some of them, closely allied to the current conservative government and led by Gérard Larcher, have released a statement to the effect that the merger between the two banks, 'with their thousands of branches throughout metropolitan France, must foster the vitality of their localities, especially in rural areas'.