Business | Banking
BNP eyes SocGen as France warns off foreign bidders
BNP Paribas confirmed yesterday that it was studying a possible bid for Societe Generale, as its fellow French bank reeled from rogue trading losses and France warned off would-be foreign bidders.
- Reuters
- Published: 00:52 February 1, 2008
Paris: BNP Paribas confirmed yesterday that it was studying a possible bid for Societe Generale, as its fellow French bank reeled from rogue trading losses and France warned off would-be foreign bidders.
"We are studying it because all Europe's banks are studying it," said a spokesman, confirming a report in French newspaper Le Monde and after a person familiar with the matter told Reuters BNP had not ruled out such an all-French deal.
SocGen shares were up 2.3 per cent at 83.70 euros in mid-morning trade, giving SocGen a stock market value of roughly 40 billion euros ($59 billion) a week after France's second-largest bank disclosed 4.9 billion euros ($7.3 billion) of losses and blamed them on one trader, Jerome Kerviel.
In 1999, SocGen escaped a takeover bid by BNP Paribas. There has been consistent market speculation since then of a merger between the two.
GSD Gestion fund manager Jacques Gautier said a tie-up between BNP Pari-bas and SocGen would be good for shareholders in both banks. "Overall, it will boost profits."
"In terms of the French retail banking network, it will double BNP's capacity. There would also be cost cuts as the two banks overlap in many areas," he said.
Clash
Meanwhile, France was heading for a clash with its European Union partners after Jean-Claude Juncker, chairman of the Eurogroup set of euro zone ministers, said a bid by a foreign player would not be surprising.
"If someone coming from abroad wanted to do good things with SocGen... why would that bother me?" Juncker, who is also the prime minister of Luxembourg, said. However, Jean-Pierre Jouyet, France's minister for European affairs, said: "When we are in very sensitive sectors, and the financial sector is one, because it's structural for the economy, it's normal that the public powers look at how and whose hands the French money is in."
A senior adviser to President Nicolas Sarkozy also weighed in to warn off foreign predators.
"The state will not remain just a bystander and leave Societe Generale at the mercy of any predator," adviser Henri Guaino said.
French Prime Minister Francois Fillon said earlier this week that "the government is determined that Societe Generale remains a great French bank."
Yesterday's exchanges came a day after EU Internal Market Commissioner Charlie McCreevy warned France that competition rules would apply to the treatment of any bidders.
"In a situation of potential takeover, free movement of capital rules provide for undiscriminatory treatment of potential bidders," McCreevy said.
Potential suitors
Analysts say foreign banks, including UniCredit, Santander, BBVA and HSBC, as well as BNP Paribas, are on a long list of potential bidders for the weakened bank.
SocGen has said it is strong enough to stay independent.
Morgan Stanley, one of two investment banks underwriting a planned capital increase to plug the hole caused by the rogue trades, meanwhile said it had cut its price target on the shares to 115 euros from 154.
Its analysts kept an "overweight" rating on the stock and a "positive view" on the company.
On Wednesday, SocGen's board resisted government pressure to sack its chairman Daniel Bouton, voting unanimously to keep him in his job.
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