French regulator to rule on deadline for bank mergers

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The Independent Online
FRANCE'S STOCK market regulator will today rule on the final timetable for the titanic bid battle involving three of the country's largest banks.

The CMF is expected to settle on 21 July as the closing date both for the 21bn euro offer by Societe Generale for Paribas and for the hostile 40bn euro bid by Banque Nationale de Paris for the other two banks.

Last week BNP raised its offers for both Paribas and Societe Generale in the wake of the collapse of attempts by Jean-Claude Trichet, the governor of the Bank of France, to broker a compromise deal.

The revised terms improve the offer to Paribas shareholders by 12.4 per cent, while the Societe Generale offer is now topped up with cash.

Quizzed by investors in London last week, Michel Pebereau, the BNP chairman, made it clear that he did not regard the higher offers as final "in the English legal sense" of the term. Analysts say that the higher offers from BNP had improved its chances of winning control of both banks but fell short of a killer blow needed to be sure of clinching its bid.

Both sides are keen to avoid an inconclusive outcome to the bid battle, which would give the authorities a pretext for resuming their intervention.

The higher offers, if accepted, would result in BNP's prudential capital - which it is required by regulators to set aside against unforeseen risks - falling to below 7 per cent this year.

The industry norm is 6.5 per cent, with many banks with which BNP is normally compared, running ratios of at least 8 per cent.

Investment banking sources did not rule out a higher Societe Generale bid for Paribas but said it was unlikely to move before today.

Overall, 4.5 billion euros has been wiped off the market capitalisation of the three banks since the state stepped in on 14 June and pushed for an amicable solution.

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