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BSCH, SocGen in tie-up
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January 31, 2000: 9:24 a.m. ET
Spanish, French banks swap stakes, seek alliance partners; BSCH profit up
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LONDON (CNNfn) - Banco Santander Central Hispano, Spain's largest bank, and France's No. 3, Société Générale, took their longstanding partnership to a higher level Monday, agreeing to swap stakes in each other and unveiling plans for joint ventures and coordinated efforts in a range of pan-European activities from asset management to online banking.
BCSH chairman Emilio Botin also said he hoped Italy's San Paolo-IMI and Commerzbank of Germany will join the alliance, Reuters reported. BSCH owns 6.9 percent of San Paolo-IMI and 3 percent of Commerzbank.
Separately, BSCH posted a 26 percent jump in net profit for 1999, in line with analysts' expectations, and confirmed earlier statements by Royal Bank of Scotland that it will provide 500 million pounds ($811 million) of extra finance for the Scottish bank's sweetened final offer for English target National Westminster.
BSCH said profit grew to 262.08 billion pesetas ($1.54 billion) last year. Net interest income rose 7.8 percent to 1.11 trillion pesetas while operating profit increased 18 percent to 578.85 billion pesetas.
BSCH was formed by last year's merger of Banco Santander - already Spain's biggest bank - and its third-ranked rival Banco Central Hispanoamericano. It sprung its latest European gambit on a day when shares of its biggest domestic rival, Banco Bilbao Vizcaya Argentaria, began trading under its new name after its recent merger.
The Spanish bank said Monday it will raise its stake in SocGen to 7 percent from around 5 percent presently, while SocGen will take a stake of up to 3 percent in BSCH.
SocGen and BSCH have been allies since 1994, and each has made little secret of its ambition to play a more prominent role on the global stage. BSCH already has several financial alliances in Europe and beyond, including extensive holdings throughout Latin America's biggest economies.
BSCH has a 9.6 percent stake in Royal Bank of Scotland and could end up with as much as 10 percent of a combined Royal Bank-NatWest, according to some reports.
SocGen, for its part, recently bought U.S. investment firm Barr Devlin and a fund-management arm of Japan's Yamaichi Securities. In Europe, however, the French bank suffered a setback last year when it was foiled in its friendly takeover bid for Paribas by rival Banque Nationale de Paris.
Under their broadened cooperation pact, BSCH and SocGen will establish joint operations across a number of areas from specialist financial services and macro-economic research to the burgeoning field of electronic banking. A new asset management team, comprised of staff from both banks, will explore opportunities to invest abroad.
The banks said they will take equal shares in any joint ventures they set up under the new partnership.
In investment banking, the alliance will focus on mergers and acquisitions in Spain, Portugal and Latin America.
In retail banking, the companies said they plan to set up common platforms for credit card services and to tap into the expected explosive growth in e-banking.
Shares of BSCH rose 1.3 percent to 10.14 euros in Madrid Monday, while Spain's Ibex-35 blue chip index fell 1.2 percent. Société Générale (PSGE) edged half a percent higher in Paris to 206.5 euros. 
--from staff and wire reports
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