The French state-owned financial institution Caisse des Depots et Consignations (CDC) has agreed to the sale of its 35% stake in compatriot mutual savings bank Caisse d'Epargne for E6.8 billion.

According to reports by the Financial Times, the sale will free Caisse d’Epargne to merge its investment banking business with that of Banque Populaire in order to create a new listed company called Natixis, a proposal that had already been discussed by the two parties.

The report stated that CDC had complained that it was not notified of Caisse d’Epargne’s talks with Banque Populaire and it had threatened to veto the project claiming such action constituted a grave breach of basic corporate governance rules.

However, the agreement to sell its stake to Caisse d’Epargne itself comes as part of a resolution to the disagreement. According to the Financial Times article, CDC is set to receive E200 million in dividends related to Caisse d’Epargne’s 2006 results, taking the overall value of the separation pact to E6.8 billion.

CDC will also increase its stake in French insurer CNP, from 36.5% to 40%, and a deal whereby CNP’s products can to be distributed through Caisse d’Epargne’s branches has also been extended until 2015.

Furthermore, CDC will buy Caisse d’Epargne out of Ecureuil-Vie insurance.