France's main banking regulator approved a Ђ19.5bn (US$21.2 bn) merger between Credit Agricole and Credit Lyonnais on condition the banks sell branches and halt expansion in certain parts of France.
In a statement, the regulator, known as CECEI (Comite des Etablissements de Credit et des Entreprises d'Investissement), said the conditions included selling off 85 branches in some areas where it thinks free competition could be at risk.
The planned merger between Credit Agricole and Credit Lyonnais, announced in December, would create a bank with about 30 per cent of the French banking market, making it one of the biggest financial institutions in Europe.
It also asked for a two-year freeze in the expansion of Credit Agricole's and Credit Lyonnais' retail banking networks in 32 districts of France. It was not immediately clear whether jobs would be affected.
