Dominique Ferrero

Former chief executive officer of Crédit Lyonnais; former deputy chief executive of Crédit Agricole

Nationality: French.

■ When Dominique Ferrero suddenly resigned his position as deputy chief executive of French banking giant Crédit Agricole in December 2003, the news shook the international banking world. Ferrero, former chief executive officer of Crédit Lyonnais, one of France's biggest banks, had been instrumental in arranging the huge merger between Crédit Lyonnais and Crédit Agricole. In his new position as deputy head of the combined bank—second only to Jean Laurent, chief executive officer of Crédit Agricole—Ferrero was expected to smooth the differences in corporate culture and management between the two companies in two key areas: corporate banking and investment banking. His departure stopped investors short and led to fears that the new company would not be able to deliver on planned savings and revenues in 2004.

Ferrero's reasons for leaving Crédit Agricole were never publicly given. It was widely speculated by analysts that he had "personality conflicts" with his immediate superior, Jean Laurent. However, both Crédit Agricole and analysts around the world denied that Ferrero left because of any taint of scandal—especially the Executive Life scandal that had cost former Crédit Lyonnais chairman Jean Peyrelevade his new job with Crédit Agricole. Without Ferrero, the analysts said, Crédit Agricole's ability to meet its forecasts of both expenses and profits became questionable.


Long before the merger with its rival banking firm, Crédit Lyonnais had been a mainstay of banking for the French public. The institution was set up by and publicly funded through the French government in the 19th century. As a result the bank was sometimes less of a lending institution and more of a governmental position, used and manipulated by politicians. Under the leadership of men like Peyrelevade and François Pinault, however, the bank became a major force in European finance. Then, in 1991, Crédit Lyonnais made a questionable investment in a failing U.S. firm, the Executive Life Insurance Company.

Executive Life, headquartered in California, had much of its capital invested in junk bonds. When the market for those bonds collapsed in the early 1990s, the company headed toward bankruptcy. Crédit Lyonnais stepped in with an offer to buy Executive Life. When the company's junk bond portfolio unexpectedly recovered, the French bank reaped a profit of some $872 million. However, in buying the insurance company, and concealing the purchase by making it through a series of holding companies, Crédit Lyonnais knowingly violated a U.S. banking law that prohibited banks from owning insurers. In a court case that lasted more than five years, U.S. attorneys convinced Crédit Lyonnais and the French government to admit culpability and to pay fines totaling about $770 million, believed to be the largest settlement of a criminal case in U.S. history.

The fallout from the Executive Life scandal weakened Crédit Lyonnais and made the bank a prime target for the French government's privatizing campaign in the late 1990s. The company's publicly owned stock was mostly privatized in 1999. The influx of private cash helped turn the bank around, and soon Crédit Lyonnais was thriving. Although the government retained 10 percent of the company's stock, another third of the company was put on the market to attract additional capital. In December 2002 Crédit Agricole made a bid equivalent to about $16 billion in cash for the 82 percent of Crédit Lyonnais that it did not already own. The deal, which was finalized the following year, made the combination of Crédit Lyonnais and Crédit Agricole France's largest bank and one of the largest financial institutions in Europe.


Ferrero, who had played no part in the Executive Life transaction, had a central role to play in the successful merger of Crédit Lyonnais and Crédit Agricole. His departure led to a dip in stock prices for the combined bank, in part because analysts were predicting revenue losses amounting to about 100 million euros. Crédit Agricole management, however, quickly absorbed his position. Ferrero went on to join U.S. investor Merrill Lynch as an advisor in the spring of 2004.

See also entries on Crédit Agricole and Crédit Lyonnais in International Directory of Company Histories .

sources for further information

Imeson, Michael, "Executive Life Affair Settled at Crédit Agricole," European Banker , January 2004, p. P1.

Kapner, Suzanne, "A Bank Deal Is Weighed in France," New York Times , September 13, 2002.

Kerr, Ian, "Stuck in the Merde," Euro Week , January 9, 2004, p. 1.

"Key Resignation Reduces Investor Confidence in Crédit Agricole," Datamonitor , December 17, 2003, .

Matlack, Carol, "The Humbling of a Tycoon; The Executive Life Scandal Casts a Pall on François Pinault's Fortune," BusinessWeek , December 8, 2003, p. 22.

Tagliabue, John, "2 Big Banks in France Join Forces," New York Times , December 17, 2002.

Timmons, Heather, "World Business Briefing Europe: France: Merrill Hires Adviser," New York Times , May 8, 2004.

"World Business Briefing Europe: France: Bank Executive Resigns," New York Times , December 16, 2003.

—Kenneth R. Shepherd

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