Under French regulations CGU, which has 3.1 per cent of SocGen and a seat on its board, could take its stake to 10 per cent without further government approval. The group, however, was yesterday playing down suggestions it would be buying anything like 7 per cent, which would cost it nearly pounds 1bn to do.
Following the announcement, which came in a formal statement to the French stock exchange after trading closed yesterday, BNP immediately lodged a complaint with the French stock market regulator, the Commission des Operations des Bourses. BNP alleged that the timing of the move implied collusion between CGU, SocGen and Paribas, the bank with which SocGen is seeking to merge, and was a clear breach of the rules on concert parties. The move comes just as shareholders are preparing to cast their votes in the bidding war.
However, CGU, which has already publicly declared its opposition to the hostile BNP bid, said it was acting to protect its commercial relationship with SocGen. CGU has a joint venture with the French bank, Sogessur, to distribute its insurance products in France and had been discussing a number of other bancassurance ventures in France.
It said it had been forced to terminate those discussions because of the uncertainty surrounding SocGen's future, but would be keen to resume if their French partner succeeded in blocking BNP's bid.
Peter Foster, CGU's finance director said: "Any investment we did decide to make would, obviously, we hope, protect our interests." He added: "Quite frankly we believe that it's in our commercial interests that SocGen wins this particular battle and we would therefore support SocGen in that."
News analysis, page 19