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Monday, 25 June, 2001, 15:08 GMT 16:08 UK
New French banking giant formed
France's third-largest bank has been formed
The new bank will remain in state hands
France's third-largest bank has been created by a merger agreed on Monday.

The combination of state-owned Caisse des Depots et Consignations (CDC) and Caisse d'Epargne, a mutual savings bank, will have equity capital of 16.6bn euros (10.1bn; $14.2bn), ranking only behind Credit Agricole and BNP Paribas.

Although CDC Ixis, the group's investment bank, may be floated in the next two years, the parent company is likely to remain state-owned.

French finance minister Laurent Fabius
Fabius: Welcomes new national champion

Welcoming the merger, French finance minister Laurent Fabius said that a strong state-run financial sector would prove vital at a time of uncertainty and change for the banking industry.

The government has warned that, despite recent progress, many French banks remain weak and vulnerable to foreign takeover.

Big bank

The new entity, to be held 50.1% by CDC and 49.9% by Caisse d'Epargne, will be managed by CDC Chairman Daniel Lebegue and Caisse d'Epargne Chairman Charles Milhaud.

The company will employ 48,000 staff, with an aggregate net banking income of 10bn euros.

The two sides hope to have completed the merger by the end of this year.

The group's focus is on savings and asset-management services, but with interests in retail and commercial banking, property and insurance.

Mr Lebegue said he aimed to help push the group outside its traditional French market.

"One of our goals... is to create a real European player," he said.

This may cause friction with some of France's European neighbours, however.

Critics have repeatedly alleged that the French government's treatment of its domestic financial industry amounts at times to protectionism.

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See also:

06 Mar 01 | Business
French bank stages recovery
13 Jun 01 | Business
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01 Jun 01 | Business
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14 Jun 01 | Country profiles
Country profile: France
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