Crédit Lyonnais

Crédit Lyonnais (French: [kʁedi ljɔnɛ]) is a historic French bank. In the early 1990s it was the largest French bank, majority state-owned at that point. Crédit Lyonnais was the subject of poor management during that period which almost led to its bankruptcy in 1993. It was acquired by former rival Crédit Agricole in 2003 (see LCL S.A.).

Founded in 1863 in Lyon by Henri Germain, Crédit Lyonnais was the biggest bank in the world by 1900. It was nationalised in 1945, as was most of the banking sector in France after the war.

Following a change of leadership and frantic expansion starting in 1988, the bank was the subject of numerous financial scandals, contributing to a huge debt of around 150 billion French francs (nearly €23 billion). This was caused by directors exaggerating investments and by problems with the bank's subsidiary companies.

Crédit Lyonnais became the leading lender to Hollywood studios in the 1980s. It also financed Giancarlo Parretti's takeover of Metro-Goldwyn-Mayer in 1990 for $1.25 billion. However, Paretti started looting the company, fired most of the accounting staff, appointed his 21-year-old daughter to a senior financial post, and used company money to buy presents for several girlfriends. By June 1991, CL had had enough: under the terms of an April agreement that gave it control of Parreti's MGM stock, it fired Parretti and began a lawsuit against him. However, CL soon faced intense scrutiny for its dealings with Parretti. Overall, CL lost $5 billion from its Hollywood deals.

The bank avoided financial disaster by moving its troubled debts and liabilities into a new state-owned company, Consortium de Réalisation (CDR). The creation of the CDR was highly controversial, as many did not believe that the French government should have bailed out the bank. The CDR notably agreed to pay US$525 million to the California Department of Insurance in order to head off a lawsuit over the Executive Life insurance scandal. The CDR also ended up with the various film libraries from now defunct film production companies that defaulted on their loans. The library was known as the Epic film library. The Loeb & Loeb law firm spent 4 years determining the full extent of the film assets. In late 1997, PolyGram Filmed Entertainment out bid Disney, Metro-Goldwyn-Mayer, Live Entertainment and several other companies, for the Epic library at $225 million.

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