Lagarde was placed under formal investigation in 2014 for negligence in a protracted legal drama pitting Tapie against a bank which he accused of defrauding him during his sale of sports clothing giant Adidas in the 1990s.

The 59-year-old Frenchwoman was finance minister under former president Nicolas Sarkozy in 2008 when she decided to allow arbitration in the dispute between Tapie and partly state-owned Credit Lyonnais.

The arbitration resulted in Tapie, who had close ties to Sarkozy, being awarded a payout of 403 million euros (USD 433 million), which would have to be covered by a state-run body in charge of settling the bank's debts.

The negligence charge comes over Lagarde's failure to challenge the award, which was hugely beneficial to Tapie but prejudicial to the state.

Lagarde has denied wrongdoing or that she acted on Sarkozy's orders.

In a statement today she said she would appeal the decision which she described as 'difficult to understand'. French Finance Minister Michel Sapin said Lagarde should remain in her post because "she is presumed innocent."

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