Imminent merger to create second-largest French bank

February 27th, 2009 - 11:32 am ICT by IANS  

Paris, Feb 27 (DPA) The French banks Banque Populaire and Caisse d’Epargne have announced the conditions for their imminent merger, creating the country’s second-largest bank.
The French government is to take a 20 percent share of the new banks through up to 5 billion euros ($6.5 billion) in subordinated loans, it was announced here Thursday.

The merger will be ready to be completed by the end of the first half of 2009. The new bank will have 110,000 employees, some 7,700 branch offices and about 34 million customers.

The merger is not without controversy, since the new bank is to be headed by Francois Perol, a close adviser of President Nicolas Sarkozy.

Opposition politicians and a number of legal experts claim that Perol will be liable to charges of conflict of interest after moving from the Elysee Palace to the private sector and having been instrumental in arranging the merger as well as negotiating aid packages to the banks.

A government Professional Ethics Committee must still approve the move. In Rome earlier this week, Sarkozy claimed that the committee had approved it.

However, the daily Le Monde reported Thursday that the head of the ethics committee, Olivier Fouquet, suggested in an email to a committee member that Sarkozy had misrepresented his position and that no decision on the move had yet been taken.

The confirmation of the merger came hours after both banks reported significant losses for 2008 because of their joint investment bank subsidiary Natixis, which lost 2.8 billion euros last year due to its exposure in the US subprime crisis.

Caisse d’Epargne posted a loss of 2 billion euros last year, while Banque Populaire reported 468 million euros in losses for 2008, its first year in the red in decades.

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