SG Paribas set to axe 900 City jobs

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The Independent Online
SG PARIBAS said yesterday that up to 900 City jobs will go over the next three years as a result of the French banks' merger.

However, Andre Levy-Lang, the Paribas chairman, said the job losses would be far less than if the rival merger plan by BNP went ahead.

This is the first time the two banks, which announced merger plans in February, have specified numbers of job losses in London. Previously they have stuck by a global figure of 1,500 for investment banking, including operations in New York and Paris as well as London.

Mr Levy-Lang refused to detail where the jobs axe will fall. But the most vulnerable areas are thought to be the equity business at Paribas and the bond dealing businesses of Societe Generale, reflecting the relative strengths of the banks' market positions in London.

Mr Levy-Lang said the banks were looking at the possibility of lock-ins to prevent key staff leaving. However, he insisted there was no question of anything on the lines of the $500m (pounds 305m) package announced by Deutsche Bank for key Bankers Trust staff. "We will do the necessary," he said.

Mr Levy-Lang and Daniel Bouton, the chairman of SG, were in London yesterday as part of their offensive to turn the tide in the battle with BNP, which gatecrashed their merger with a rival three-way bid. The bid is expected to receive formal approval from the French authorities to go ahead later today.

The City will play a vital role in deciding the fate of the French banks, with 20 to 30 per cent of the shareholdings of all three banks believed to be UK-based.

Mr Levy-Lang said: "The three-way merger between SG, Paribas and BNP will not happen. It is already very challenging to accomplish a merger with two banks. We cannot see how you can do it with three."

The two banks' chairmen said that under their merger plan they would be able to return 6bn euros to shareholders if BNP withdrew its counter- offer and let them proceed. This would be a result of extra savings the two banks have found since they began working on the merger plans over six weeks ago.

They believe they can reduce the capital allocated to poorer performing businesses in their combined investment and corporate banking divisions by 26 per cent to 6.1bn euros by 2001, freeing up capital to use in better performing areas. Some of the surplus will be used to finance investment and acquisitions in businesses such as asset management, but there will be scope for money to be returned in the form of a buy-back.

Mr Bouton said the rival three-way bid by BNP would lead to a loss of revenue of 230m euros without achieving any cost savings from merging the retail branch networks.