Societe Generale pays US fund $457m for Credit Lyonnais stake

Société Générale, the French bank, touched off frenetic takeover speculation yesterday when it revealed it had bought 3.8 per cent of its recently privatised rival Credit Lyonnais from Tiger, the American hedge fund run by Julian Robertson, for $457m.

Société Générale, the French bank, touched off frenetic takeover speculation yesterday when it revealed it had bought 3.8 per cent of its recently privatised rival Credit Lyonnais from Tiger, the American hedge fund run by Julian Robertson, for $457m.

Shares in Credit Lyonnais soared as much as 10 per cent on investor hopes that the deal signalled a further round of consolidation within France's banking sector.

Daniel Bouton, the SocGen chairman insisted the stake was "friendly," and that Credit Lyonnais had been informed prior to the purchase going ahead. However, the remarks failed to calm market nerves particularly as Jean Peyrelevade, the Credit Lyonnais chairman had rebuffed earlier attempts by SocGen to buy a stake in the bank ahead of its privatisation in June on the grounds that SocGen was a direct competitor.

The French government, which has for some time been trying to engineer a merger between Credit Lyonnais and the mutually owned banking giant Credit Agricole - so far without success - is also unlikely to welcome yesterday's developments. One banker said: "This is clearly opportunistic. Buying the stake has at least allowed SocGen to get into the dining room, even if it is not actually at the table yet."

The French banking sector has already been the stage for some of the most aggressive takeover activity in Europe, with the three big private sector banks having spent much of the year locked in a bruising takeover battle with inconclusive results. Having seen the collapse of his attempts to merge SocGen with its rival Paribas, Mr Bouton has been open about the need to find "partners", while Mr Peyrelevade has also talked of finding a merger partner for the bank.

Meanwhile the board of Credit Commercial de France met yesterday to discuss its response to a surprise 10bn euro takeover bid at the weekend from ING, the Dutch banking and insurance giant.

ING which withdrew the bid on Sunday after what it believed to be an unenthusiastic response said prior to the meeting it would not increase its 137.5 euro a share offer.

In an interview published yesterday Mr Bouton insisted that the bank was not planning to merge with another European bank but would instead pursue plans to build cross-border alliances cemented by share swaps.

SocGen is believed to be close to concluding a deal with BSCH, the Spanish banking giant which would lead to the two banks putting together some of their consumer finance and investment banking businesses. BSCH which is backing the Royal Bank of Scotland's bid for National Westminster Bank in the UK has a 5 per cent stake in the French bank.

Credit Lyonnais' core shareholders who are barred from selling for two years include Allianz, the German insurance giant, Axa, the French insurer, Germany's Commerzbank, Spain's BBV, CCF, Credit Agricole, and Banca Intesa of Italy.