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Trichet enters bank fight
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August 19, 1999: 9:42 a.m. ET
French bank governor said to seek compromise in gridlocked merger
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LONDON (CNNfn) - France's huge bank takeover rumbled on Thursday, despite apparently being eclipsed by the Japanese as the biggest bank merger in the world.
The three-way six-month-long battle between BNP, Paribas and Société Générale hit a gridlock earlier this week, and the decision on who wins the battle looks set to be decided by the regulators.
The latest development involves the apparent intervention of Jean-Claude Trichet, governor of the Bank of France.
According to a press report Thursday Trichet is attempting to broker a politically expedient solution to the current impasse.
In February SocGen and Paribas agreed to merge, but their plans were scuttled when rival BNP launched hostile bids for both of them. BNP's plan, tacitly supported by the French government, was to form a French banking colossus, able to display real international might with assets of more than $1 trillion.
Shareholders blocked that scenario, however, as BNP received only 31 percent of the voting capital in SocGen when the votes were tallied last weekend.
The French banking regulator is now due to rule on whether BNP has "effective control" over SocGen, whether BNP should have to hand back the shares it has received, or whether it will remain as a significant minority shareholder in SocGen. BNP won outright control of Paribas, so their merger will proceed.
The regulator's decision has been postponed while compromise solutions are worked out.
Trichet's proposal, according to the Wall Street Journal Thursday, involves SocGen and BNP taking comparable stakes in each other and working together in certain fields.
"The idea is to allow the participants to save face, but whether it's acceptable depends on the level of shareholdings," a person close to the talks told the Journal.
Neither SocGen nor BNP officials could be reached for immediate comment on the report.
Industrial Bank of Japan, Dai Ichi Kangyo and Fuji Bank confirmed Thursday they are contemplating a merger that would create a $1.26 trillion banking giant. 
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