BRUSSELS OKS CREDIT LYONNAIS AID $9.4 BILLION BAILOUT IS EU'S BIGGEST

BRUSSELS OKS CREDIT LYONNAIS AID $9.4 BILLION BAILOUT IS EU'S BIGGEST

The European Commission on Wednesday approved the biggest state-aid package in the 37-year history of the European Union - a $9.4 billion government bailout for Credit Lyonnais of France, Europe's biggest bank.

The commission's green light for the rescue package, amounting to 45 billion francs ($9.3 billion), came almost a year to the day after it cleared a $4 billion government handout to Air France, another ailing state-owned French firm.In exchange for the government cash, Credit Lyonnais, is committed to disposing of 35 percent of its non-French banking assets by 1998. Those assets stretch from the Netherlands, Scandinavia and Britain to South America.

The disposals will be compensation for the "huge" size of the aid package, said Karel Van Miert, the EU's competition commissioner, who struck the deal with the bank and its ultimate owner, the French government.

The bank will be able to choose the assets to be sold - it is already disposing of its Dutch operations - but the commission will monitor the sales to ensure that Credit Lyonnais shrinks outside France by 35 percent within three and a half years.

Mr. Van Miert said the case was a "landmark" because it is the first time the commission has had to rule on a state-aid package for a bank.

The commission's approval faces a possible legal challenge by rival banks or even EU governments in the European Court of Justice.

The aid package of 20 billion francs for Air France is being challenged by the British government and seven airlines, including British Airways and KLM Royal Dutch Airlines.