Sources close to BNP said the bank is willing to preserve SG's independence for an unspecified period of time, although it still wants a full merger eventually to form a $1 trillion European banking powerhouse.
Under the terms of the deal it will preserve SG's stock market listing and its board. In return BNP wants to co-ordinate IT purchases, back office functions and marketing. "It will be a soft landing for SG's management," said an adviser to BNP.
But such a move was immediately rejected by SG, which still hopes to retain its independence.
BNP controls 37 per cent of SG as a result of its 20bn euro (pounds 13bn) offer, which closed on 6 August, but lacks the overall majority needed to take management control. A parallel 20bn euro offer by BNP for Paribas resulted in BNP winning 65 per cent of Paribas shares and taking management control.
Details of the peace plan will be discussed in a meeting this afternoon between the heads of both companies and the Comite des Etablissements de Credit et d'Enterprises d'Investissement (Cecei), the French financial regulatory body.
The meeting, to be chaired by Jean-Claude Trichet, the governor of France's central bank, will decide before the end of the week whether BNP should be allowed to keep its 37 per cent stake. Mr Trichet has been under intense pressure from thePrime Minister Lionel Jospin to broker an agreed merger between the warring banks.
Committee members will hear personal testimony from SG chairman Daniel Bouton and his opposite number at BNP, Michel Pebereau. SG will argue that BNP should be forced to sell the stake, since it failed to secure commitments from a majority of SG shareholders, and is threatening legal action if the Cecei does not agree. "Shareholders made it clear that they rejected the BNP offer," an SG spokesman said. "If BNP gets control by the back door it will be a travesty."
The six-month bid battle has seen an ugly and very public tussle between the interests of shareholders in the respective companies and those of French politicians anxious to engineer a powerful French "national champion" bank capable of taking on international rivals.
The pressure has risen in recent days following the three-way, pounds 775bn banking merger between Dai-Ichi Kangyo Bank, Industrial Bank of Japan and Fuji Bank and the announcement of talks between Deutsche Bank, Germany's biggest bank, and its smaller rival Dresdner Bank.
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