Banks feel heat as Paribas and Societe Generale merge

PRESSURE FOR consolidation among Europe's big banks intensified yesterday after France's Societe Generale and Paribas yesterday tied the knot on a 15bn euro (pounds 10.2bn) all-share merger to create the world's fourth largest banking group.

Immediately the deal was struck the architects of the new deal held out a hand to other potential merger partners, triggering speculation that a further merger deal with either Britain's Barclays bank or Wall Street investment house Merrill Lynch could follow yesterday's move.

Daniel Bouton, the chief executive of Societe Generale and vice-president of the combined bank, said yesterday: "We were looking to something that would consolidate the bank's stronghold in France but would also be open to a diversity of parties."

Yesterday's French merger comes barely a fortnight after Spain's Banco Santander and Banco Central Hispano merged to create a new 30bn euro giant on the French banks' doorstep, and only weeks after Germany's Deutsche Bank cemented a Transatlantic deal with Bankers Trust of the US.

The SocGen/Paribas deal leaves Banque Nationale de Paris, the privatised French bank that had recently made its own merger overtures to Paribas, particularly vulnerable.

There was speculation that yesterday's merger would leave BNP little choice but to either succumb to a merger approach from BBV of Spain, or go for Barclays - the British clearing bank that has yet to find a replacement for Martin Taylor, the chief executive who quit the bank in dramatic circumstances in December.

Dresdner, owner of Kleinwort Benson, the City investment bank, has close ties with BNP but resisted efforts by successive French governments to persuade it to go the next step and merge with the French bank.

Significantly, yesterday's merger brings Societe Generale and Paribas up to roughly level pegging with Britain's Barclays and National Westminister Bank in terms of market worth, as well as its rival BNP.

SG Paribas said it was still interested in being allowed to participate as a core shareholder in Credit Lyonnais, which is being privatised this spring. To this end Societe Generale is dropping its complaint to the European Commission about the government bail-out of its rival.

Shareholders in the two banks will be offered shares in the combined SG Paribas on the basis of five SocGen shares for eight Paribas. That represents a premium of 17 per cent over the average Paribas share price over the past three weeks.

The banks are to take a merger provision of one billion euros to cover redundancies and the costs of integrated computer systems. They anticipate merger savings of 800m euros a year by 2001.

However, both Mr Bouton and Andre Levy-Lang, the Paribas chairman who is to assume the chairmanship of the combined group until 2002, insisted there would be no "forced redundancies" and that any headcount reductions would be through natural wastage.

Outlook, page 15

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk