A French magistrate has ruled that Bank of France governor Jean-Claude Trichet must stand trial over a banking scandal, in a decision that throws doubt onto his ambitions to head the European Central Bank.

Philippe Courroye, the magistrate probing a series of scandals at banking giant Credit Lyonnais, defied advice from state prosecutors to leave Mr Trichet alone.

Mr Trichet was an official at the French Treasury while Credit Lyonnais was being restructured, and his supporters had hoped that he might only be called as a witness, or not called at all.

Any trial, whatever the outcome, could jeopardise Mr Trichet's prospects of succeeding Wim Duisenberg as president of Europe's central bank next year.

The ECB said it had no comment on Mr Trichet's legal problems, but French Government sources indicated that Mr Trichet remained their choice under any circumstances.

Skeletons and closets

The Credit Lyonnais investigation has sent shockwaves through the French establishment.

During the 1980s, the then state-owned bank lent money exuberantly, plunged into the red when many loans turned bad, and then cooked the books to disguise its losses.

Cleaning up the bank, which involved transferring much of the bad debt into another entity, is estimated to be costing the French taxpayer as much as $30bn.

Credit Lyonnais' lending record, and the process by which it has been restructured, is now the subject of the official probe.

It is not yet clear what charges will be levelled at the defendants in any Credit Lyonnais trial, but experts say they will focus on the rigging of the bank's accounts.

Brilliant banker

Mr Trichet is seen as one of the world's most brilliant central bankers.

Mr Duisenberg was something of a compromise candidate

He was strong favourite to succeed Mr Duisenberg, who has said he will step down in July next year.

In 1998, Mr Trichet only failed to clinch the job when the German government refused to have a French banker at Europe's economic helm, and insisted on the neutrally Dutch Mr Duisenberg.