IT WAS the most spectacular fire seen in central Paris for decades. Last Sunday, the headquarters of the Credit Lyonnais, the city's largest single civil building, and home to an institution which only a few years ago was the world's biggest bank outside Japan, went up like "a vision of hell", in the words of one passer by.
Perhaps there was an element of the last judgment in it. For over the past five years the Credit Lyonnais, owned by the state since 1945, has been cursed by a saga of blunders and catastrophes unprecedented in French banking history.
Eighty years ago it was the world's leading bank. It went through a period of stagnation in the 1960s and 1970s - falling to third place among French banks - until it was rescued by one of the country's most brilliant and imperious senior civil servants, the former Treasury head, Jean Yves Haberer.
Haberer took over in 1988, on the return of a socialist government, determined once again to make the Credit Lyonnais one of the world's great banks. He bought banks in Belgium, Spain, Italy and Ireland (Woodchester investments). In Germany, Credit Lyonnais took over the Bank fur Gemeinwirtschaft.
The result was that within four years Credit Lyonnais was in seventh place in the banking world, with only six Japanese companies in front of it. Its turnover had risen by 80 per cent to nearly 2,000 billion francs (about £250 billion), more than the entire government budget.
But Haberer's headlong drive for expansion was not soundly based, either psychologically or financially. According to Eric Leser, author of a best selling account of the bank's misfortunes entitled Crazy Lyonnais, Haberer was a man driven by a personal mission to show the world the wrongness of the 1986 decision by the then Chirac government to sack him as head of France's other great bank, Paribas.
That, Leser says, is one explanation for the extraordinary entanglements the Credit Lyonnais got itself into in the early 1990s, just at a time when the boom years of the 1980s were turning into the economic which France has been in ever since. Haberer wanted the bank to be the "white knight" of French entrepreneurship, the bank which had "the power to say yes" - in, the words of its favourite advertising slogan - to a new generation of thrusting French and foreign businessmen. The problem was that many of these men were untrustworthy "chancers" on a mind boggling scale.
"It was the beginning of the end of the mad years. There was no morality or ideology left, just loads of easy money and a hunger to get more. In this climate, there were lots of adventurers, big and small, and all of them seemed to have Credit Lyonnais as their bank," says Leser.
The bank lent over a billion francs to Robert Maxwell. Another billion went to the Marseilles businessman, politician and football club owner, Bernard Tapie, now a bankrupt who has seen his collection of Rubens, Renoir, Degas and Chagall art treasures seized by the bank as part payment for debts owed.
Probably the bank's most spectacular act of folly was the billion franc loan by Credit Lyonnais's Dutch subsidiary to two Italians, Giancarlo Parretti and Florio Fiorini, to enable them to take over MGM (Metro GoldwynMeyer) film studios in Hollywood.
The key transaction was a $500 million loan, approved without either effective guarantees or reference to the bank's three or four top officials, given to Parretti, a man who had recently been sentenced to nearly four years in prison and banned by the government from buying a major French studio.
MGM quickly went bankrupt and the bank was forced to take it over. The affair also resulted in the biggest ever bankruptcy in Swiss banking history, with the collapse of Fiorini's Saesa group.
These were the kind of doomed involvements which led the Credit Lyonnais to announce losses of 1.8 billion francs in 1992, seven billion in 1993 and a colossal 12.1 billion in 1994. By then Haberer had gone, replaced by the tough, socialist minded, media conscious head of the insurance giant UAP, Jean Peyrelevade.
Peyrelevade's "new broom" policies, including high profile stunts like early morning seizures of paintings and furniture at Bernard Tapie's Left Bank home, have pulled Credit Lyonnais back from the brink. Last year, it was able to announce a nominal - and symbolic - profit of 13 million francs.
However, the bank is currently working within the stringent terms of a second government rescue plan in as many years. Leser estimates that a cash strapped government may have to come up with 50-100 billion francs before the Credit Lyonnais is in any shape for future privatisation, perhaps involving one of the big German banks.
Ironically, last week's conflagration could be the best thing to have happened to the bank for years, its negative image - continually reinforced by long drawn out court cases involving former partners and debtors - has continued up to the present day.
Its executives will hope that this latest misfortune will win it back some public sympathy and allow it to impose a necessary belt tightening on its thousands of employees. Some Paris banking sources are even predicting that preliminary discussions on its privatisation, the last of the great French banks with their extremely low profit margins, could begin before the end of the year.