This is because for the French, hostile takeover situations on this scale are virgin territory. The rules are therefore made up as we go along, and pretty bizarre those rulings can seem too, even to those newly returned from their Continental hols, filled with exotic foods and wines, and generally benign feeling for Johnnie Foreigner.
We are now approaching the final denouement, with the chairmen of both Banque Nationale de Paris and Societe General, today hauled before Jean- Claude Trichet, Governor of the Bank of France, to argue their corners. Since this is a battle being fought largely outside the accepted rules and practices that bind British takeovers, it appears that he could reach almost any conclusion.
To be fair on Mr Trichet, he is being obliged to rule not just on the technicalities of whether Banque Nationale should be allowed to keep its 36.8 per cent stake on Societe Generale and thereby take control of the bank, but also on whether Banque Nationale's acquisition of both Societe Generale and Paribas might not be against the public interest. Mr Trichet is hardly likely to pay much attention to what the British press has to say on these matters. None the less, the sensible thing for him to do on both counts would be to allow BNP to bring its grand design to a successful conclusion. BNP's compromise proposal, offered by way of olive branch last night, seems a reasonable enough way of proceeding.
This would be a good thing on public interest grounds, since it would accelerate the shakeout the inefficient French banking system so desperately needs. There would be a big penalty in terms of jobs and working practices, but Mr Trichet has shown himself more sympathetic to labour market reform than many in the French Government, so he's unlikely to flinch on those grounds.
The technicalities too argue for BNP to be allowed to get its way. From a City standpoint, it seems bizarre that a company should be able to gain control of another with an acceptance level of less than 37 per cent of the stock. Still more bizarre is yesterday's news that BNP has increased that stake to 43 per cent, even though the offer officially closed two weeks ago. But then this is France, and any decision to back BNP looks more justifiable once the peculiarly incestuous nature of French cross shareholdings between alliances of commercial interests is properly understood.
Many of Soc Gen's shareholders are borrowers, or have some other form of arrangement or connection with Soc Gen that goes beyond that of an ordinary shareholder. In these circumstances, it is misleading to talk about the interests of the "majority". The majority of free, independent shares have been voted decisively in favour of BNP. If Mr Trichet were to begin the process of breaking up these complex cartels of vested commercial interest by giving BNP the all clear, then he would be doing everyone a favour.Reuse content