Credit Lyonnais Looking to Buy Regional Bank
NEW YORK -- Undaunted by its burgeoning portfolio of troubled loans to Hollywood, Credit Lyonnais is considering buying a large U.S. regional bank, a senior executive said.
Robert A. Cohen, who oversees Credit Lyonnais' nine U.S. banking offices, said the French bank wants to broaden its presence here. The offices now hold $7.3 billion in assets, mostly in loans to large corporations, but the bank also wants to court middle-market and retail customers.
East Coast Preferred
No targets have been identified, but Mr. Cohen said an East Coast bank with more than $10 billion in assets would fill the bill.
Credit Lyonnais, France's third-largest bank, with $243 billion in assets, would not rule out the possibility of acquiring a troubled U.S. institution.
But buying a U.S. money-center bank is out of the question, Mr. Cohen said, because it is "politically" unfeasible.
A decision on an acquisition will be reached during the next 12 months, he said.
While some Credit Lyonnais units have run into loan problems in the U.S., the commercial banking operation has not. The U.S. offices have stuck mostly to high-rated Fortune 1000 companies, Mr. Cohen said.
The U.S. operation arranged between $4 billion and $5 billion in loans to finance industrial development and acquisitions last year, up from about $3 billion in 1989. It expects to syndicate around $3 billion this year, he added, mainly because of the tepid merger market.
But the parent bank has run into some problems here. Most notably, its Dutch banking subsidiary is facing large losses on about $1 billion in loans to Italian financier Giancarlo Parretti to finance his company's acquisition of MGM.
Credit Lyonnais has been rapidly internationalizing its operations as part of a drive to become a global bank operating in all important banking sectors.
The bank acquired this year two Spanish banks and an Italian bank and has agreed in principle to exchange a 10% stake with Germany's Commerzbank AG.
Some analysts believe the bank's rapid expansion internationally is leading it into dangerous waters.
"Credit Lyonnais wants to be everywhere internationally and seems to be willing to pay the price," said Stephen Lewis, an analyst with Salomon Bros. in London. "They've spent an awful lot of money and there's a certain question mark over that strategy."
Other Foreign Banks Looking
Credit Lyonnais is the latest of a number of foreign banks, attracted by low stock prices, to show an interest in U.S. bank acquisitions.
Westpac Banking Corp., Australia's largest bank, said several months ago that it was seeking to acquire a U.S. regional bank.
Others have already made their first moves, including Banque Nationale de Paris and Spain's Banco Santander.
Mr. Cohen said that low share prices of banks made this the ideal time to purchase a U.S. institution.
"The value of these banks is close to bottom and can only improve as U.S. banking restructures," Mr. Cohen said. "Foreign institutions have a limited time to take advantage of the opportunity."
Alluding to problems at some foreign-owned banks, Mr. Cohen acknowledged that there are "enormous risks" in purchasing a U.S. bank. But he said Credit Lyonnais has little alternative if it wishes to move beyond wholesale banking.
"Building a middle-market and retail operation from scratch and breaking even on it would take years," Mr. Cohen said. [Tabular Data Omitted]
Chief executive: Jean-Yves Haberer
Worldwideassets: $243 billionU.S. assets: $7.3 billion
Worldwide employees: 80,000
U.S. employees: 600
Worldwidebranches: 3,400Earnings: $617 million, up 18.4%.
Sources: Company reports, American Banker