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France to invest in merged Banque Populaire/Caisse d'Epargne

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France to invest in merged Banque Populaire/Caisse d'Epargne

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France has confirmed that is to take an eventual 20 percent stake in the bank created by the merger of Banque Populaire and Caisse d’Epargne.

Initially the government will get preferred shares without voting rights which will later be converted into ordinary stock. In return for further bailout money, it is expected that French President Nicolas Sarkozy’s deputy chief of staff, Francois Perol, will be named to head the merged company, which will be France’s second largest bank. That has led to accusations from opposition politicians, and from some within Sarkozy’s party, that he was abusing his power. The president said an ethics commission has examined the issues and there’s “no problem” with giving Perol the job.