The news could hardly have come at a more poignant moment for Mr Jean-Claude Trichet, the Banque de France governor and would-be president of the European Central Bank.

Just as the euro was finally reaching parity with the dollar, Mr Trichet learnt that his chances of taking over from Mr Wim Duisenberg at the head of the ECB next year had taken a sharp and unexpected turn for the worse.

French prosecutors announced yesterday that Mr Philippe Courroye, an investigating magistrate, had ruled that Mr Trichet and eight others should face trial for their alleged role in the scandal over the near-collapse of the Crédit Lyonnais bank a decade ago.

The 59-year-old Mr Trichet, instead of preparing to embark on the final stage of his banking career at the top of an important European institution, now faces a battle to clear his name through the notoriously slow French justice system, a race against time that only the most optimistic observers think he can win.

As well as a personal blow to Mr Trichet, the magistrate's decision undermines the French government's hard-won deal with its European partners to ensure that a French candidate succeeds Mr Duisenberg.

Yesterday's consternation in France was all the greater because at the end of May the prosecutor recommended that Mr Trichet should not be tried. There was, he said, no case to answer. That appeared to clear Mr Trichet's path to the ECB presidency after a two-year investigation until, that is, Mr Courroye exercised his extensive powers to overrule the prosecutor's advice.

Mr Trichet and the others, including Mr Jacques de Larosiere, the former French central bank governor and International Monetary Fund chief, are accused of complicity in presenting false accounts for Crédit Lyonnais when it was a state-controlled bank in the 1990s.

At the time, Mr Trichet, as director of the treasury, was the senior civil servant representing the interests of the state as shareholder. Under Mr Jean-Yves Haberer, another of the accused, Crédit Lyonnais had gone on an ill- advised international lending spree.

By 1992 the bank was the biggest lender in Europe, but it was also in serious financial trouble.

The essence of the case against Mr Trichet and his co-accused, including the auditors, is that they deliberately juggled the bank's accounts to make its losses seem less serious than they really were.

In March 1993, Crédit Lyonnais announced a 1992 loss of 1.8 billion French francs, but that was only the tip of the iceberg and excluded substantial bad-loan provisions that would have made the bottom line look much worse.

The bank was subsequently rescued, at a cost to the French taxpayer of FFr120 billion (€18 billion), before being privatised in 1999.

Today it is a small but very successful commercial bank.

Mr Trichet's numerous supporters in the world of French finance insist that he and Mr de Larosiere were right to go along with the accounts, in order to maintain Crédit Lyonnais's solvency ratios and so avert possible consumer panic and a crisis in the banking system at a time of economic recession.

Mr Trichet, they add, was one of those who had been warning the government that Crédit Lyonnais was over-extending itself under Mr Haberer.

"Trichet told Pierre Beregovoy [then finance minister] that Haberer was being stupid," says a French banker who knew Mr Trichet at the time. "Trichet has the notes. But Beregovoy was mesmerised by Haberer." The banker adds: "The question is whether they cooked the books for 1992."

For Mr Trichet's lawyers, the issue is not whether the accounting procedures were justified but whether Mr Trichet had any role in drawing up the accounts. According to them, he did not.

"Our argument is that he did not take part in the preparation of the accounts," says lawyer, Mr Yves Baudelot. "He's the shareholder."

The supporters of Mr Trichet, who will plead not guilty, are convinced he will eventually be acquitted. But his chances of winning the ECB presidency are nevertheless likely to be destroyed by the timing of the trial, or the timing of any appeal against the decision to go to trial, in the unlikely event that the prosecutor makes such an appeal.

In either case, lawyers say, a hearing would start around March 2003 too close for comfort to the July 9th departure date announced by Mr Duisenberg.

The court will have thousands of pages of documents to examine and may defer judgment for several months.

France's protestations, however, reflect not just confidence in Mr Trichet but also desperation about the shortage of other plausible French candidates should he prove unavailable next July.

One of the ironies of the Crédit Lyonnais saga is that President Jacques Chirac, who negotiated through the night at a European summit four years ago to ensure that a French person took the helm at the ECB, is being blamed for launching the case that seems set to block France's best candidate.

In 1996, Mr Chirac, incensed by Mr Trichet's strict monetary policies, pressed Mr Jean Arthuis, then finance minister, to make the complaint about Crédit Lyonnais that triggered Mr Courroye's investigation into the bank and those who oversaw its accounts.

Mr Trichet, whatever the outcome of his case, may yet pay the price for Mr Chirac's pique and the slowness of French justice by forfeiting the job that would have been the culmination of his career in central banking.

Yesterday, his lawyers were preparing for a trial that is expected to start 10 years after he first set eyes on Crédit Lyonnais's alarming accounts for 1992.

"It looks pretty bad for Trichet," says the French banker who knew him in the 1990s. "As far as the ECB job is concerned, I think he's done for." - (Financial Times Service)