French loan set to pay Credit Lyonnais debts

FRANCE will borrow €4.5bn (£3.7bn) by the end of the year to settle debts from the collapse of the Credit Lyonnais bank, a French finance ministry official said yesterday.

The state has until the end of 2014 to settle the bank’s remaining debts, but decided to take action this year, the official said. A bill to be presented this week updating the 2013 budget will include authorisation for the new debt to be issued.

French taxpayers were left on the hook when the formerly state-owned lender had to be bailed out in the mid 1990s after losing billions of francs. French bank Credit Agricole subsequently took over Credit Lyonnais in 2003.

With its 10-year benchmark bond yields at 2.2 per cent, France can currently borrow at close to all-time lows reached in May even though Standard & Poor’s trimmed its credit rating on Friday to AA from AA+.

Le Parisien newspaper, which first reported the debt issue, said that Credit Lyonnais’ collapse will have cost French taxpayers a total of €14.7bn since it nearly went bust in 1993.