Brussels To Probe Credit Lyonnais

The European Commission was set to launch an investigation into whether Crédit Lyonnais, the French state-owned bank, was allowed to repurchase a former subsidiary, Société de Banque Occidentale, on advantageous terms.

The probe, expected to be approved by commissioners meeting in Strasbourg Wednesday, is the latest setback in the FFr45 billion restructuring of the troubled bank, the largest state aid package ever approved by the Commission.

Sociétéde Banque Occidentale was one of a number of Crédit Lyonnais assets hived off last year into a separate holding company, Consortium des Réalisations. The French bank repurchased SDBO in February for FFr50 million, which the Commission believes is well below the market price.