French industrial holding company Compagnie de Suez has agreed in principle to sell a controlling stake in Banque Indosuez to French mutual bank Credit Agricole. Press reports say Credit Agricole will initially take a 51 per cent stake in the bank. Banque Indosuez has branches or representitive offices in the UAE, Egypt, Iran and Yemen and an offshore unit in Bahrain as well as stakes in Al-Bank Al-Saudi Al-Fransi, Banque Libano Francaise and Banque Francaise de l’Orient.

The Suez group, which made heavy losses in 1994 and 1995, has been criticised in the past for having too diversified a range of holdings. Its Arab shareholders include Lebanese Prime Minister Rafiq Hariri and the Kuwait Investment Authority, but with the Middle East on holiday for the Eid al-Adha break, it was not immediately clear how the sale would be viewed in the region. Last year, two other French financial institutions tried unsuccessfully to merge Indosuez into a new group. Paris bankers said at the time that the Arab shareholders were among those opposed to the move (MEED 30:6:95).

Credit ratings agencies reassigned Banque Indosuez higher ratings after news of the acquisition, reflecting the view that it will strengthen the bank. Newspaper reports have estimated the bank’s value at about FF 12,000 million ($2.32 million). Credit Agricole is primarily a French domestic bank, though it owns a 33 per cent stake in Lebanon’s Fransabank. Control of Indosuez will allow it to expand its reach abroad.