When the barons of Crédit Agricole were debating whether to bid for rival French bank Crédit Lyonnais three years ago, one of the more vocal critics of the proposed deal was Edouard Esparbès. As head of Agricole's largest division, Paris-based Crédit Agricole d'Ile de France, Esparbès was the biggest of the barons, or regional chiefs, and enjoyed tremendous independence under the cooperative bank's federal structure. He worried that a merger with the centralized Lyonnais, where investment bankers rather than regional bosses controlled relationships with key corporate clients, would threaten his autonomy, costing him customers and revenues.

Esparbès failed to stop the E16 billion ($18.6 billion) acquisition, but he has prevailed nonetheless. He won a hard-fought internal power struggle to become chief executive of the combined group's investment bank, named Calyon, and deputy CEO of Crédit Agricole to boot.

Now Esparbès has embarked on a major expansion designed to make Calyon a European powerhouse. But he is doing so in an unusual way. Instead of leveraging the parent bank's strengths by focusing on the French corporate market, which could create conflicts with the regional chiefs, Esparbès has chosen to target the lucrative but highly competitive market for equity derivatives, a business dominated by French rivals Société Générale and BNP Paribas. He aims to triple Calyon's modest derivatives business by 2007 and use those revenues to finance expansion in fixed income, asset management and other areas.

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