CGU purchase of SocGen stock frozen by regulator

Click to follow
ATTEMPTS BY CGU, the UK insurance giant to intervene in the French banking bid battle turned sour last night after France's stock market regulator ordered the cancellation of the 3.62 million shares CGU acquired last week in the bid target Societe Generale.

CGU paid pounds 440m to buy the shares in an off-market deal from the Tiger Fund, the New York hedge fund run by financier Julian Robertson, in a move which doubled its existing stake to 6.9 per cent.

The Bourse regulator, theCOB, which is investigating share purchases in all three banks involved in bid, said yesterday it had frozen the CGU stake until an 26 August ruling on the trade, which it said violated a 1967 law that forbids any trade in a non-regulated market during an offer period.

The ruling means that CGU will not be able to vote its shares in support of SocGen's efforts to fend off the hostile bid from its rival Banque Nationale de Paris which closes on Friday. BNP is seeking to thwart SocGen's friendly merger with Paribas, the investment bank, and force a three-way merger to create a new French banking giant.

CGU, which before the latest share buying already had 3.1 per cent of SocGen and a seat on its board, said last week it had decided to buy more shares to protect its bancassurance joint venture with the French bank.

However, as well as antagonising BNP - which immediately complained to the COB - the move raised eyebrows in the City, where CGU shares have fallen sharply in the past week.

The latest ruling has done little to prevent increasingly blatant buying by both sides. It emerged yesterday that San Paolo-IMI, one of Italy's largest banks, has bought 1.8 million BNP shares since the end of June.

Peter Foster, the CGU finance director, said last night: "We took advice from our lawyers prior to executing the transaction. We are consulting with our lawyers."

BNP last night issued a further complaint to the COB after the Paribas board said it would vote the 5.6 per cent of the bank it held as treasury stock in support of the proposed merger with SocGen.