Plan To Move Sarkozy Aide To Bank Job Causes Row

Perol took part in crucial meetings at the presidential Elysee Palace on Saturday with the heads of the two banks.

The expected appointment of a close economic adviser to Nicolas Sarkozy as head of a new merged bank has drawn accusations of abuse of power by the French president from across the political spectrum.

Sarkozy's office has not officially confirmed that Francois Perol, the president's deputy chief of staff, will take the helm of the new group that will emerge from the state-backed merger of mutual banks Caisses d'Epargne and Banque Populaire.

A formal announcement is due on Thursday, but Sarkozy all but confirmed the move at a news conference in Rome, where he said an ethics commission had examined the issue and there was "no problem" with giving Perol the job.

"The government's appointments policy is always based on the same criterion: competence, competence, competence," he said, adding that in any case it was for the boards of the merging banks to make the decision, not him.

That is not how the process has been presented in French media, who were first told of Perol's impending appointment after meetings at the presidential Elysee Palace over the weekend involving Sarkozy, Perol and the two banks' bosses.

"Nicolas Sarkozy wants to decide everything, even things that are not part of his remit," Francois Hollande, a former head of the opposition Socialist Party, said on RTL radio.

He was among several politicians, including from Sarkozy's own camp, who said Perol should not get the job for two reasons.

One, he was too close to Sarkozy so the president would have an unhealthy influence on the new bank. Two, public servants involved in overseeing the affairs of a private company should not then gain a personal interest in that company.

Banque Populaire and Caisses d'Epargne announced last year they would merge to help them weather the economic downturn. The merged bank would rank second in size in France, after Credit Agricole.

The state, and Perol in particular, have been closely involved in piloting the merger and the government could inject around 5 billion euros ($6.4 billion) into the new group, a source close to the deal told Reuters on Sunday.

"It should be for the two banks to pick new managers ... The president is hungry for power, even the power to name private sector managers," Francois Goulard, a legislator from Sarkozy's party, was quoted as saying in Le Parisien newspaper.

Others stepped up to defend Perol's appointment.

"Do we need the best man for the job to make this merger work? The answer is clear, it's yes ... If it's Francois Perol, he's the best man for the job," said Xavier Bertrand, secretary general of Sarkozy's UMP party, on France 2 television.

Some opposition Socialists also expressed their support.

Perol, who as a civil servant cannot comment on political issues, has not spoken publicly about the row.