|
French bank judgment day
|
 |
August 27, 1999: 10:41 a.m. ET
Regulator to rule on BNP's hostile bid for SocGen; shares of both issues lower
|
LONDON (CNNfn) - Shares of Banque Nationale de Paris and Société Générale were lower in Paris Friday afternoon as the banks awaited the French banking regulator's verdict in a drawn-out hostile takeover battle.
Meanwhile, hundreds of SocGen staff members demonstrated their hostility to a BNP merger in front of the Bank of France.
SocGen shares were down 2 percent in mid-afternoon trading in Paris while BNP shares were down 0.20 percent
The banking battle has dragged on for 6 months, with BNP launching simultaneous hostile bids for both SocGen and Paribas to create Europe's biggest bank -- bids that followed friendly merger plans between SocGen and Paribas.
The banking regulator, known by its acronym CECEI, was due to hand down a final decision late Friday on whether BNP should be allowed to keep the 31.8 percent stake in the voting rights, or 37.1 percent of the bank's shares, that it won in its hostile bid for SocGen.
BNP contends that the stake gives it effective control of SocGen, while SocGen says the majority of shareholders rejected the bid and BNP should be forced to hand back the shares tendered.
BNP won clear control in its bid for Paribas, scuttling the deal with SocGen.
The head of the regulatory committee, French central bank governor Jean-Claude Trichet, was reported to be holding last-minute talks with the two banking companies' chiefs.
Speculation in the French press is that Trichet was trying to force through some kind of compromise deal that would involve both banks exchanging minority stakes of between 5 and 10 percent and agreeing to limited cooperation.
But one Paris-based banking analyst said such a compromise would fail to please anyone other than the politicians.
"SocGen has made it clear it wished to remain independent. BNP would be unhappy because it would have failed in its three-way merger plan," the analyst told CNNfn.com. "And for investors, it is taking the speculative appeal out of future French banking consolidation, if civil servants are seen to decide the outcome."
Analysts acknowledged that the clear support shown by the French government for the BNP bid, which would provide an "all-French solution," has left the regulator in an impossible position. The government is concerned that if SocGen remains independent, it will be swallowed up by a non-French bank.
"The regulator faces a very difficult decision with political, legal and social issues to consider," one analyst in Paris said. "Whatever the decision, this one still has some way to run."
Among the headaches for the 11-member panel was the threat of legal action from both sides if the decision does not go their way.
Trichet is seen as sensitive to the fact that any decision will affect the perception of his impartiality by his counterparts and politicians around Europe. He is lined up to take over as the governor of the European Central Bank in 2002.
"His decision will be closely considered by many important decision makers around Europe," the analyst said. "If he rules in favor of the BNP bid he will be seen as being unable to resist political pressure. And any governor of the ECB has to prove he is independent."
This could steer Trichet toward a decision to keep the markets happy. He could opt to order BNP to return the shares it holds in SocGen and then allow the bank to launch a new bid.
The stumbling block there is that this would give SocGen the opportunity to go out and find a European suitor, which would run counter to the government's wishes of forming a $1 trillion French super bank.
|
|
|
|
|
 |
|
