Outlook: French connection gets banks guessing
Tuesday 02 February 1999
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.
- 1 Forget 'The Dress': Here are five of the biggest news stories you might have missed
- 2 The black and blue dress: Makers considering a white and gold version
- 3 PornHub turns masturbation into energy in bid to save the planet
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
Boris Nemtsov shot dead: Outspoken Putin critic who had expressed fears for his life is killed near the Kremlin
PornHub turns masturbation into energy in bid to save the planet
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
White and gold or blue and black – what colour is the dress? An eyewitness gives a definitive answer
Saudi Muslim cleric claims the Earth is 'stationary' and the sun rotates around it
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
This is what it's like to be dead, according to a guy who died for a bit
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...