Note to M. Trichet

24 January 2003

If it did, its credibility would be exploded. Together, Agricole and Lyonnais would dwarf other French banks. The regulator may not want to block the deal outright. But tough conditions should be imposed.

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The Commission des Etablissements de Credit et des Entreprises d'Investissement (CECEI) is considering the competitive impact of the E19.5bn merger of Credit Agricole and Credit Lyonnais.

It is the first time the French banking regulator has conducted such an enquiry since it took responsibility for banking competition in 1994.

Opponents of the merger, notably fellow French bank BNP Paribas SA, argue that it would create an unacceptably dominant player in the French retail market. Together, Credit Agricole and Credit Lyonnais control more than 30% of the French market for current accounts. In some rural areas they have more than a 50% market share.

The CECEI has sought comments from competitors, customers and suppliers. It is expected to publish its conclusions within weeks. Only if it gives its approval to the deal will Agricole be able to table a formal bid.

BNP Paribas, which owns 16.4% of Lyonnais and has expressed interest in bidding for the bank, has sought to coordinate opposition to the deal.

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