France Moves to Rescue Troubled Lender

A year after rescuing one troubled lender, the French Government moved today to salvage another, allowing shareholders of Credit Foncier de France S.A. to sell their battered stock at more than twice the market price.

Under the plan, the state-run Caisse des Depots Consignations will pay 70 francs a share for Credit Foncier, an offer that values Foncier at $527 million.

Caisse des Depots will immediately sell the shares to a state-owned company set up to liquidate Credit Foncier. The liquidation company will be headed by Jerome Meyssonnier, the chairman of Credit Foncier.

The liquidation will result in the disappearance over time of 144-year-old Credit Foncier. It comes just a year after the French Government bailed out the Credit Lyonnais bank, which was near bankruptcy.

The Government stressed that it would continue to back the 260 billion francs ($51 billion) in bonds issued by Foncier, France's largest issuer of debt, after the state.

Foncier shares have been suspended since Thursday. They last traded at 30.20 French francs ($5.90), well below the 173.33 francs they fetched last July. The shares will resume trading Monday.

The holding company that buys the shares -- Caisse Nationale du Credit Foncier -- is expected to transfer Credit Foncier's core business to a separate company and sell off the remaining assets.