Credit Lyonnais Chairman to Resign

Credit Lyonnais Chairman Jean Peyrelevade said Thursday that he would step down immediately to defend himself against claims he was aware of wrongdoing related to the bank’s 1993 purchase of Los Angeles-based Executive Life Insurance Co.

“The U.S. prosecutor seems to want to dissociate my personal case from that of the bank,” Peyrelevade said. He is leaving the Paris-based bank to “be able to express” himself freely without damaging Credit Lyonnais’ interests, he said.

Last month, Credit Lyonnais and the French government reached a tentative agreement to pay $575 million and admit wrongdoing related to the Executive Life purchase to avoid criminal charges. Prosecutors charged that the bank violated laws preventing foreign banks from owning insurers.

“I maintain what I always said throughout the case,” said Peyrelevade, who has been chairman since late 1993. “I have no memory that anyone drew my attention to the conditions of the purchase of Executive Life that were possibly open to criticism.”

He said he became aware of problems related to the acquisition at the end of 1998. Peyrelevade, 63, said Sept. 9 that he would step down once the bank reached a final accord with U.S. prosecutors. He also resigned from the boards of Credit Lyonnais and France’s second-largest bank, Credit Agricole, which agreed to purchase Lyonnais in May.

Jeffrey Isaacs, one of the U.S. prosecutors handling the Executive Life case in Los Angeles, declined to comment.

In the late 1980s, Executive Life bought a portfolio of high-yield corporate bonds with a face value of about $6.4 billion. The bonds’ value plunged in 1990, leaving the company insolvent.

Under a 1991 agreement signed by the state of California, Credit Lyonnais subsidiary Altus Finance obtained the right to buy Executive Life’s junk bonds for $2.7 billion. The insurance business was sold to a separate group of investors.

The California insurance commissioner’s office claims that secret agreements gave Altus control of Executive Life’s insurance business. It said in its civil suit that Credit Lyonnais used French auto insurer MAAF Assurances and several other companies as fronts to conceal the bank’s role.