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SocGen 'not for sale'
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August 30, 1999: 8:57 a.m. ET
French bank gives up early gains as Trichet quells bid talk
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LONDON (CNNfn) - Shares of France's Société Générale gave up most of their early gains Monday after blunt remarks by the country's central bank boss dampened speculative buying prompted by hopes the bank may be a ripe takeover target.
After a delayed opening in Paris Monday, SocGen shares initially jumped 4.2 percent amid bid talk just 48 hours after French banking regulators blocked Banque National de Paris' hostile bid.
By mid-afternoon in Paris, however, SocGen (PGLE) shares had settled back to trade up just over half a percent at 192.0 euros. Earlier, Bank of France governor Jean-Claude Trichet told French radio that he agreed with SocGen CEO Daniel Bouton that his bank isn't for sale.
BNP (PBNP) shares were off 2.5 percent at 74.10 euros, while Paribas (PPM) shed 3.23 percent to 104.9 euros.
"I would simply like to say, like the bank's chairman, that Société Générale is not for sale," Reuters quoted Trichet as telling Europe 1 radio.
Trichet headed the 11-member regulatory panel whose ruling early Saturday capped a six-month takeover battle that saw SocGen fight desperately to fend off BNP's efforts to take "effective control" with only a minority of its shares.
The decisive conclusion to France's longest and most hotly contested takeover battle is being viewed by analysts as a blow to the French government's preference to create a French-controlled "super-bank" in the rapidly consolidating European financial services sector.
BNP ruled out the prospect of a new bid for Société Générale after the CECEI regulator ruled Saturday -- after an 11-hour meeting -- that it had to return its 31.8 percent stake in SocGen to shareholders.
Meanwhile, SocGen's Bouton has expressed his desire to forge more alliances. But he has, for the present at least, refrained from suggesting that a cross-border tie-up may be in the offing.
How long Bouton will be able to maintain that stance is unclear, given the fact that most analysts see pan-European bank consolidation gaining momentum.
The French regulators' decision effectively ended BNP's six-month pursuit of SocGen and Paribas to create Europe's first trillion dollar bank.
However, the success of BNP's bid for Paribas -- which originally had planned to merge with SocGen, but conceded defeat after BNP garnered a greater share of votes -- creates France's largest bank and the third-largest in Europe by assets.
Financial analysts in Paris were wading through the implications of the CECEI decision, which caught many by surprise. Many had speculated that the government would broker a last-minute compromise that would allow BNP to keep its SocGen stake or make another bid.
BNP now may try to buy another European bank. BNP Paribas Managing Director Baudouin Prot said the new French bank is in a strong position to seek a cross-border merger. "With 21 billion euros of equity capital and a market capitalization of 34 billion euros, we can envisage the idea of a cross-border merger with confidence, and on an equal footing," Prot told financial daily L'Agefi.
Forging a Dresdner alliance?
Press reports said BNP also is interested in strengthening its alliance with Dresdner bank, Germany's third-largest. Dresdner, which has a long-standing partnership with BNP, confirmed it wanted to increase its cooperation with BNP.
SocGen management faces the task of rebuilding a strategy after its own friendly merger with Paribas was killed by BNP's intervention. Analysts believe it's now vulnerable to a bid from a non-French bank. ABN Amro and ING Group, the two largest Dutch banks, are viewed as possible suitors, though both declined comment.
BNP and SocGen both were downgraded or put on "creditwatch" by the major ratings agencies, with their ratings subject to change.
Arnaud de Toylot, banking analyst at Standard & Poor's in Paris, said "there was always a possibility" of a non-French bid for SocGen, though he expected it to be fiercely contested. "SocGen has already proven throughout this battle the strong commitment of their major shareholders to keep it independent," he said. 
--from staff and wire reports
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