Outlook: French connection gets banks guessing

ANOTHER DAY, another banking merger. The French being the French, this one is a strictly Gallic affair but with the added bonus that most of the cost savings, and therefore most of the job losses, will be in London, not Paris. Where exactly the merged Societe Generale Paribas ranks in the pecking order of world banks is not terribly clear.

Never mind, it is a national French champion, knocking Credit Agricole off its perch as the number one bank on the other side of the Channel. What's more it may just be the kick in the derriere the overbanked French market needed.

The creation of SG Paribas gives the French a seat at the big boys' table. It also neatly dispenses with one of the main obstacles to the French government's sale of Credit Lyonnais. No wonder the finance minister Dominique Strauss-Kahn was jumping for joy at the merger yesterday.

As with the SBC-UBS merger, it is not hard to see where most of the pain will be felt among the 78,000-strong workforce. The overlaps are mainly in London where both companies run large investment banking operations from sumptuous offices. Paribas may be longer established in the City. But SG has been making up ground fast. It has added the banking division of Hambros to its equities business, Strauss Turnbull, and is bankrolling Nicola Horlick's dream of creating a fund management business with pounds 5bn under management.

The target of pounds 560m in cost savings within three years gives the management plenty to aim at. Paribas' opulent new headquarters in Marylebone may be one early casualty while the wine bars of the City should be filling soon with fixed income dealers and equity analysts drowning their sorrows and looking for new employment.

Inevitably questions will now be asked of that dwindling band of European banks which still remain outside larger national or transatlantic groupings. Consolidate or die certainly makes for an easy catchphrase. Given the pace of merger activity among Continental banks, there is a danger that Don Cruickshank's review of the UK banking scene could look even more parochial by the time he publishes his conclusions.

But the UK banking industry is structured in a way that makes it difficult, if not impossible, to adopt the same national solutions as the Swiss, the French and the Spanish, as the failure of Barclays and NatWest to merge shows.

The word from Paris yesterday was that SG Paribas has ambitions to spread its wings further. There is also talk that Banque Nationale de Paris will be obliged to look overseas for a partner. Sitting on their fat market capitalisations and hemmed in by domestic monopoly constraints, it may be time for the UK clearers to strike pre-emptively across borders.

PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Dawkins: 'There’s a very interesting reason why a prince could not turn into a frog – it's statistically too improbable'
newsThat's Richard Dawkins on babies with Down Syndrome
Sport
Club legend Paul Scholes is scared United could disappear into 'the wilderness'
football
Life and Style
food + drink
News
video
Sport
Malky Mackay salutes the Cardiff fans after the 3-1 defeat at Liverpool on Sunday
footballFormer Cardiff boss accused of sending homophobic, racist and messages
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst / Project Manager - Financial Services

£40000 - £45000 per annum + BONUS + BENEFITS: Harrington Starr: One of the mos...

Lead Business Analyst - Banking - London - £585

£525 - £585 per day: Orgtel: Lead Business Analyst - Investment Banking - Lond...

Service Desk Analyst- Desktop Support, Helpdesk, ITIL

£20000 - £27000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Service Desk Engineer-(Support, ITIL, Software Vendor)

£30000 - £35000 per annum: Harrington Starr: Service Desk Engineer-(Support, S...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home