French bank stages recovery

Credit Lyonnais turns itself around with high profits

French investment bank Credit Lyonnais has reported a 74% rise in pre-exceptional profits.

The bank amassed profits of 960m euros (£610m), compared to 553m euros the previous year, well above analyst expectations.

It elected to take 259m euros out of these profits to pay off future loan charges associated with its restructuring at the time of its privatisation.

Credit Lyonnais, once the biggest bank in the world outside of Japan, was the centre of a scandal last year when it emerged that it had tried to hide huge losses.

Troubled times

Following the scandal, the disgraced bank was bailed out by the French government at an estimated cost of $15bn to taxpayers.

At today's economic conditions, net profit should continue to rise in 2001

Credit Lyonnais

And the bank's former chairman and managing director faced an investigation on suspicion of falsifying balance sheets.

A series of bad business loans in the early 1990s had left it with billions of pounds in debts.

Credit Lyonnais was privatised in 1999 on the orders of the European Commission, and has now successfully returned to profits.

Bright future?

Analysts say that the future is looking strong for the bank, now that it has managed to clear all future loan charges which would have stretched out until 2005.

At the time of the restructuring, the bank put all its loss-making businesses into a holding company.

This holding company has now turned itself completely around, making a profit of 111m euros in 2000 compared to a loss of 223m euros the previous year.

In a statement the bank said that it will continue to pursue the same business model in order to further bolster its growth and profitability this year.

"At today's economic conditions, net attributable profit should continue to rise in 2001," said the bank.

The company's share price rose almost 2% to 37.5 euros on the Paris Bourse.