CGU ups the stakes in French bid battle

CGU, THE UK insurance giant yesterday snapped up 3 per cent of Societe Generale, doubling its holding in the French bank to 6 per cent, writes Andrew Garfield.

The move follows its dramatic eleventh-hour intervention in France's banking bid battle when it declared its intentions on Wednesday to buy shares in SocGen in support of the bank's efforts to fend off a hostile bid from rival Banque Nationale de Paris.

The intervention has sparked controversy in France where, following a complaint by BNP, the Commission des Operations des Bourses, the French stock market regulator, last night announced an investigation into share trading in all three banks. French regulations forbid purchases by parties acting in concert with the bidders in a public offering.

BNP yesterday confirmed that following the share purchases by CGU it has instructed counsel, a preliminary step towards suing the British group. BNP said yesterday: "For CGU to raise its stake to 10 per cent, it would have to invest over $1bn - all of that to protect a limited commercial venture in bancassurance generating turnover of $15m."

Another SocGen ally, Banco Santander Central Hispano, Spain's biggest bank, yesterday confirmed it had lifted its stake from 2.85 to 3.34 per cent.