Francois Pinault, the luxury goods baron whose empire controls Gucci, is in major discussions to reach an out-of-court settlement to the long-running Executive Life insurance scandal that could cost him hundreds of millions of dollars.

Pinault, France's third-richest man with a family fortune estimated in July at GBP3.14bn, has been left isolated after the French government and former state bank Credit Lyonnais, also threatened with charges, agreed to pay GBP346m in fines and potential damages last week.

Lawyers for Pinault's family holding company Artemis are in talks with attorneys about a parallel settlement.

The case arises from the purchase by Credit Lyonnais in 1991 of collapsed Californian insurer Executive Life, and the related purchase by Artemis of a portfolio of junk bonds* from Executive Life which Artemis then sold on turning a profit of $2bn. Both Lyonnais and Artemis are alleged to have concealed details of the transactions from US supervisory authorities.