-A new inspiration bank
Action of Crédit Lyonnais of 1863.
Banks appealing to savers, like those which already existed in the Germanic world, only appeared in France under the impetus of the Saint-Simonians with the Crédit Mobilier in 1852 of the Pereire brothers, by lowering the par value of the shares to five hundred francs and by practicing a discount rate lower than that of the Bank of France. Its initial success will inspire followers among the big bank personified by James de Rothschild, who was initially unfavorable. But the appeal of the capital needs of the railway revolution and industry in general will show the relevance of this financing tool. It would be imitated by Crédit Foncier in 1852, then by Crédit Lyonnais, whose initial idea was organized by Arlès-Dufour in 1862[4]. He pushed Henri Germain, whom he had appreciated for several years, to take the initiative and direction, contenting himself with a seat as an administrator, but whose actions of all his family and friends had a value of the same order as those of Germain[5]. The creation of a competing bank in a provincial town in principle requires government authorization, but the legislative body passes the law of May 23, 1863 on public limited companies which frees the project from this authorization.
It was in Lyon that Henri Germain, 39 years old, son of a silk worker, founded on July 6, 1863 a bank with a local vocation, but with a new inspiration: Crédit Lyonnais. His associates are businessmen and silks from Lyon like Henry Jaubert, Joseph Bellon, but also from Geneva, Saint-Simonians like Arlès-Dufour, Enfantin, Talabot and Chevalier, personalities such as Eugène I Schneider. This creation is linked to the second banking revolution of the mid-19th century, which saw a new generation of banks of Saint-Simonian inspiration organize the systematic collection of the dormant savings of the general public and drain them towards industrial jobs or towards the financial market.
Crédit Lyonnais grew very rapidly during its first twenty years of existence, its capital having increased from eight to two hundred million francs, during a period of strong speculation on the Paris Stock Exchange[6]. In 1880, when the bank had existed for seventeen years, it hosted an “evening exchange” organized by the secretaries, in the large hall of Crédit Lyonnais[7], which allowed securities to be exchanged after closing.
A strategic axis: London, Paris, Lyon and Marseille
The banking and commercial past of Lyon and the industrial potential of the region could ensure the local prosperity of the establishment. Crédit Lyonnais, however, established a foothold in Paris and Marseille, establishing two branches there in 1865, the year in which it already had nearly ten thousand depositors. The young bank weathered the crises of 1866 and 1870 without too much damage. That same year, the occupation of the Paris headquarters by the Prussians pushed Henri Germain to open a branch in London (United Kingdom), the world financial capital. Crédit Lyonnais is also starting to develop a network of agencies in the Lyon region in order to collect its resources as closely as possible.
A business bank with lasting success
Crédit Lyonnais, a general public establishment, also behaves as an investment bank, by creating companies or taking significant stakes in them: if the launch of the Fuchsine factory in Lyon ended in failure in 1870, Crédit Lyonnais had significant successes such as the creation in 1879 of Lyonnaise des Eaux and the Société landaire Lyonnaise. That year, the bank also took control of two insurance companies; Crédit Lyonnais made a place for itself on the financial markets by contributing to the placement of the territorial liberation loan in 1871, by issuing loans for the cities of Paris and Lyon.
Network expansion
The rapid development of Crédit Lyonnais allowed it to abandon its SARL status in 1872 for that of a public limited company, which gave it the possibility of significantly increasing its capital; in 1878, it rose to the rank of leading French bank. While it was still absent from certain large French cities, its foreign network already at that time included agencies in London, Constantinople, Alexandria, Geneva, Madrid and soon Saint Petersburg. In 1879, Crédit Lyonnais set out to conquer Parisian customers by creating twenty-three local offices during the year. Then comes the turn of the other French regions, from 1880.
The “Germain doctrine” was born from a crash
The expansion of Crédit Lyonnais came to a halt in 1881-1882 with the crash of the Union Générale due to unbridled stock market speculation. Henri Germain sensed the crisis coming in 1881 and set about reducing credits and fixed assets; Crédit Lyonnais can then respond to withdrawal requests from its customers. The “Germain doctrine” on liquidity and job security will long serve as a rule of conduct for all deposit banks. It is based on a principle: “short-term resources cannot finance long-term jobs”.
The second French capitalization in 1900
During the Belle Époque, driven by an expansion in shareholding, Crédit Lyonnais was the second largest capitalization on the Paris Stock Exchange, which had four banks among the top six listed companies in terms of volumes.
Expansion (1882-1914)
Installation of the central headquarters in Paris
Despite the difficulties of 1882, the Paris branch was promoted to the rank of central headquarters, thus establishing a shift in decision-making power to Paris (the head office remained in Lyon). It can now be established further out, because the so-called “hôtel desItaliens” since it is located on the boulevard of the same name, started in 1876 under the direction of the architect Bouwens, was inaugurated in 1883. From 1880, an “evening exchange” was organized by the coulisiers, in the great hall, from 4 p.m. to 7 p.m.[7].
Detailed article: central headquarters of Crédit Lyonnais.
A global network of agencies
In its logic as a deposit bank, Crédit Lyonnais continues to expand its national and international network. From 1882 to 1900, the total number of agencies increased from one hundred and ten to one hundred and eighty-nine. It doubled again between 1900 and 1913. Abroad, in addition to its previous locations, the bank now offers its services in Brussels, Moscow, Odessa, Smyrna, Lisbon, Porto, Port Said, Cairo, Jerusalem, Barcelona, Valencia, Seville and San Sebastian.
Debt issues and placements
Crédit Lyonnais is very active in issuing and placing French and foreign loans. Thanks to a surplus balance sheet, this export of capital made France “the banker of the world”. Crédit Lyonnais, which had banned industrial participations, helped companies through bond issues and especially through the discounting of commercial paper, which remained a major activity of the establishment.
The first world bank
Henri Germain died in 1905, but he was able to see the establishment he founded become the world's leading bank by balance sheet total in 1900; Crédit Lyonnais still held this rank in 1913. Its central headquarters, symbol of this power, was completed that year under the direction of architects Félix Narjoux and Victor Laloux. The company then has 16,400 employees around the world, including 13,900 in France.
The interwar period (1914-1945)
The aftermath of the Great War
The outbreak of the First World War affected Crédit Lyonnais: nearly eight thousand employees were mobilized by the army, many headquarters were closed, the extension of commercial deadlines paralyzed trade and around 20% of deposits were immediately withdrawn. France and Europe emerged from the conflict very weakened. Crédit Lyonnais, which lost 1,592 employees, found operating conditions very different from before the war.
Revolution and inflation
Following the October Revolution of 1917, Russian agencies were definitively closed in 1920 and the Russian debt was no longer recognized by the Bolsheviks. Soon in Türkiye, the nationalist revolution of Mustapha Kemal draws the country's agencies into the same whirlwind. In France, inflation is eating away at the resources of annuitants, traditional clients of Crédit Lyonnais.
New competitors
In France, the post-war banking landscape changed in parallel with political upheavals (the Russian and Turkish revolutions, inflation, etc.). New competitors appear and the State, through public establishments or the Treasury, becomes an important player in the financial system. In this difficult context, Crédit Lyonnais temporarily lost its first place in France between 1920 and 1929. A strike further darkened the picture in 1925.
Reclaiming places of honor
Market capitalization of
main French companies in 1936[8] Société Capital
(in billions of FF)
Water Lyonnaise 1.60
CPDE 1.40
Bank of France 1.30
Lyon credit 1.00
EELM 1.00
Liquid air 1.00
General Society 1.00
Rhône-Poulenc 0.90
Saint-Gobain 0.82
Alais Froges 0.80
Kuhlmann 0.80
Electricity Union 0.79
Electricity of Marseille 0.76
To overcome the bad economic situation of the 1920s, Crédit Lyonnais initiated a patient development process. At the end of the First World War, keen to diversify his jobs, he expanded his industrial clientele. This resulted, on the one hand, in short-term financing for businesses, and on the other hand, in the creation of a medium-term credit subsidiary, UCINA (Union for Credit to National Industry), set up in 1919 in collaboration with the Comptoir national d'escompte de Paris. On the other hand, a continuous policy of extending the branch network is being carried out, notably under the leadership of general manager Édouard Escarra, in order to increase the bank's resources. The network thus reached the number of 1,450 permanent or intermittent seats in the 1930s, before being reduced slightly under the effects of the economic crisis. Thanks to this series of measures and strong activity in the “securities” sector, Crédit Lyonnais once again became the leading French bank in 1929. It weathered the great crisis of the 1930s relatively well, when many local and even national banks went bankrupt.
In 1936, it was the fourth largest French market capitalization, after the rise of French industrial companies, while the bank was still third in 1913.
Under the Occupation
Despite the bombings suffered by certain French agencies and the weakening of ties with foreign agencies, Crédit Lyonnais was less affected by the war than in 1914-1918. Unable to use the money of its depositors in loans, due to slowed economic activity, the bank places it in Treasury bonds.
Crédit Lyonnais had long-standing relationships with Deutsche Bank[9]. He derived profits from collaboration with Nazi Germany that were difficult to estimate[10]. In 1945, the Committee for Confiscation of Illicit Profits estimated it at around 150 million francs[11].
According to historians Alain Plessis and Philippe Verheyde, "while the bank's principle until then was to defend all its clients, [...] the legislation against the Jews organizing their dispossession, the measures that the Germans want to impose on all nationals of countries "enemies of Germany" [...] to prevent them from disposing of their securities and force them to open the vaults that they had rented from the bank, have weighed on the conduct of certain bank officials"[12]. A note from the general director, Édouard Escarra, invites Crédit Lyonnais executives to “carry out a careful review of all your accounts to discriminate between Aryan holders and non-Aryan holders”[13]. The procedure to follow is indicated in three stages: “1) we have already carried out a census of Jewish accounts; 2°) the list must be reviewed to correct omissions; 3°) if there is doubt, write to the client so that he can send a certificate of non-belonging to the Jewish race”[14].
In the 1970s, we still found in agencies account opening documents drawn up during the war and called “signature cards” on which we could read the handwritten words “I declare that I am non-Jewish” before signing.[ref. necessary]
However, some banking executives linked to Crédit Lyonnais refuse this collaboration. This is the case of Olivier Moreau-Néret, financial inspector[15], who joined Crédit Lyonnais as general secretary in 1926 and became general secretary for economic affairs at the Ministry of Finance in July 1940: he resigned in June 1941 because he did not accept the positions taken vis-à-vis the Germans to cover the costs of the Occupation troops and on the military concessions made by Vichy in Syria. He then returned to the bank as general manager in 1949 and then became president in 1955[16].
In 1943, a major capital increase took place. In the field of regulation, a statute for the banking profession was promulgated in June 1941; it is supplemented and modified by the banking law of December 2, 1945, which now clearly separates deposit banks from investment banks and closely regulates the distribution of credit. The law of December 2, 1945 finally decided on the nationalization of the four main credit institutions, the CNEP, the BNCI, the Société Générale and the Crédit Lyonnais[17].
The Thirty Glorious Years (1945-1966)
The choices of Reconstruction
Despite a restrictive regulatory framework (the creation of agencies is subject to quotas), the establishment pursues a proactive policy of conquering market share. As income from securities operations was reduced proportionally by half compared to pre-war, Crédit Lyonnais intensified its efforts in favor of industry, particularly in the area of foreign operations and discounting. Subsidiaries like SOFINEX, created in 1963, make it possible to take stakes in the capital of certain companies, an activity that the status of deposit bank does not authorize.
Innovation and financial engineering
In the field of financial engineering, innovations followed one another: it was on the initiative of Olivier Moreau-Néret, managing director and securities specialist, that the first issues of bonds convertible into shares and “participating” bonds took place on behalf of Pechiney in the 1950s. In 1952, the creation at the central Paris agency of the “Accredités Bourse” service, specializing in asset management, was a first in the financial sector. It is the work of Maurice Schlogel, just like SLIVAM (Société Lyonnaise d'Investissement en Valeurs Mourables), created in 1959, which is the forerunner of SICAVs.
New start of the international network
On the international level, the network extended from 1947 to Latin America (Brazil, Peru, Venezuela) then, more ephemerally due to diplomatic tensions, to the Middle East. In Africa, with decolonization, agencies became associated banks.
The European headquarters of the UN and the bank in Switzerland
Former historic branch of Crédit Lyonnais in Geneva taken over by Crédit Agricole.
After the Second World War, the European headquarters of the UN and dozens of international organizations moved to Geneva, which would be profitable for international trade banking activities. During this period, Switzerland was the most prosperous country in the world according to the IMF. If at the beginning Crédit Lyonnais de Genève was in losses, the bank made profits from 1956 following the Suez Canal crisis during which the United Nations confirmed Egyptian legitimacy.