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SocGen in solo strategy
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October 6, 1999: 10:29 a.m. ET
French bank earmarks $1.6B for growth after failing to win Paribas
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LONDON (CNNfn) - French bank Société Générale, still smarting from the loss of merger target Paribas to rival Banque Nationale de Paris, has earmarked 1.5 billion euros ($1.6 billion) for targeted acquisitions over the next two years.
But just how the bank will fulfill its expansion strategy remains unclear, the bank's own chairman acknowledged this week.
"I don't exclude a cross-border, but it is rather complicated," said SocGen chairman Daniel Bouton, in remarks to reporters in Paris Tuesday that were carried by the Wall Street Journal Wednesday.
"Alliances or partnerships can create value for several years with a much-lower execution risk than a merger," Bouton was quoted as saying. "We are at the start of an accelerated evolution of the European banking landscape. In the second half of the next decade, banks will break out of their boundaries."
SocGen has been touted as a ripe target for a takeover or alliance ever since it successfully repelled a buyout bid by BNP in August following a six-month battle that shook the French banking sector.
The outcome dashed BNP's hopes of acquiring both SocGen and Paribas -- with whom SocGen had been in friendly merger talks -- to create Europe's largest bank, with $1 trillion in assets.
But while French banking regulators thwarted BNP's advance on SocGen on the grounds it had never won "effective control" of its target, they ruled in favor of BNP's takeover of Paribas, in which it had garnered majority control.
Following the ruling, Bouton, defiantly asserted that his bank was none the worse for the battle -- and insisted he would continue to aggressively pursue cross-border partnerships and acquisitions outside France.
Among the rumored options for SocGen are a link with AGF, a unit of Europe's largest insurer, Allianz, which is seen by analysts as a possible kingmaker in the French bank's future strategy.
Allianz -- which took a 6 percent stake in the privatizing Crédit Lyonnais earlier this year -- also holds a 3 percent stake in SocGen which it notably didn't relinquish to BNP during the takeover battle.
Bouton also confirmed that SocGen was talking to Franco-Belgian bank Dexia about a deal that would involve Dexia taking a stake in SocGen unit Crédit du Nord. The transaction would boost Dexia's retail activities in France.
Dutch banking giants ABN Amro and ING Group are also seen as potential bidders for SocGen, though neither bank has commented on the speculation.
In his presentation in Paris, Bouton said he saw two possible responses to the evolving banking environment in Europe.
"A merger, but only on the condition that we find -- something that's very rare -- an alter ego who shares the same vision and has strong compatibility," he said. "That was the case with Paribas."
Or "partnerships, which create a lot of value, with less execution risk than you have in a merger," Bouton added.
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