BY NOÉMIE BISSERBE

PARIS—The French government and two state-controlled entities are in the home stretch to create a new municipal lender from the remains of troubled Franco-Belgian bank Dexia SA, but they have yet to agree on the price of a key asset, the fate of hundreds of employees, and the exact missions of the future company.

Under a proposed arrangement discussed over the weekend, state financial house Caisse des Dépots & Consignations and La Banque Postale, the banking arm of the French post office, would set up a joint unit ...