Allocations for shares in BNP will be scaled down

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INSTITUTIONAL and corporate applications for shares in Banque Nationale de Paris will be substantially scaled down as a result of high demand from private investors for the first of the French government's new wave of privatisations, writes Peter Rodgers.

With pounds 5bn of applications chasing pounds 1bn of shares reserved for private investors, Edmond Alphandery, the economy minister, said institutions would be cut back 20 per cent and a group of 'hard core' business shareholders would be scaled down 10 per cent.

The core shareholders include companies such as BAT Industries of Britain and Rhone-Poulenc of France. Of the pounds 1bn shares reserved for institutions, a third was allocated outside France, with strong demand from the UK.

Mr Alphandery said 2.8 million French private investors applied, which compares with the 1 million applications that BNP said it would like to see when the marketing campaign began. The minimum allocation for private investors has been cut back from 40 to 15 shares at a price of Fr240 ( pounds 28.74) each.

The institutional and hard core shareholders' offers for the issue, which values BNP as a whole at pounds 5bn, have already closed but the terms allowed for a cutback.

The success of the issue, which has been criticised as under-priced, paves the way for the next stage of privatisation with the sale in the coming months of government stakes in Rhone-Poulenc, the chemical and pharmaceutical company, and Elf Aquitaine, the oil group. These already have large private shareholdings.