Credit Lyonnais faces huge fine

Ex-chief Jean Peyrelevade is the best-known of the accused

French bank Credit Lyonnais has agreed to pay $100m to settle charges that it illegally bought a US insurance firm twelve years ago.

The payment forms part of a $770m settlement deal between the US authorities, the French government, and a handful of French firms.

The deal is believed to be the biggest criminal settlement in US history, prosecutors said.

Six French executives not covered by the deal are facing criminal charges.

They include former Lyonnais chairman Jean Peyrelevade and the bank's ex-chief executive Jean-Yves Haberer.

Compensation

Mr Peyrelevade could face a personal fine of $500,000 and a lifetime ban on working in the US banking industry.

Prosecutors allege that Lyonnais used front companies to buy California-based insurer Executive Life in an attempt at getting round laws barring banks and foreign governments from owning more than 25% of US insurance firms.

Credit Lyonnais was partly owned by the French government at the time of the acquisition.

Some of the $770m penalty will be used to compensate former Executive Life policyholders, who lost out when the firm went bust shortly before being bought up by Lyonnais.

Ronald Iden, who led a Federal Bureau of Investigation into the Executive Life takeover, said policyholders received at most 70% of their benefits, while Lyonnais made a profit of "at least" $1.5bn.

The settlement deal, unveiled late on Wednesday, avoids a high-profile criminal trial which could have exacerbated diplomatic tensions between Washington and Paris.