Credit Lyonnais May Post Profits In First Half

It was "not excluded" that the state-controlled bank could show a slight profit, said the source who declined to be identified.

The bank and the conservative government of Prime Minister Alain Juppe have been in talks for months about how to amend last year's state bailout, the second in two years, which has become a millstone around the bank's neck. The government has refused any official comment on whether progress has been made in the talks and has only said that a solution to the bank's woes must be reached.

The government and the bank, whose downfall was the biggest banking scandal in recent French history, are in a race against time to come up with new salvage terms.