Yesterday's intervention from Britain's biggest composite insurer suggesting it would secure a 10 per cent blocking stake in Societe Generale to protect its own interests adds yet more confusion, for the time has finally arrived for shareholders in Societe Generale and Paribas, the two banks at the centre of France's titanic bid battle to make up their minds. They now have yet another factor to consider which of the two diametrically opposed visions of the future for the French banking industry to back. Rarely in any bid battle could the choices or the outcome have seemed so finely balanced. Nor could so much have been at stake.
Success for Michel Pebereau, the chairman of Banque Nationale de Paris who set the cat among the pigeons in March when he gatecrashed the SG Paribas agreed deal with a dramatic 38bn euro bid to create France's Lloyds TSB, could have dramatic implications not just in France but for the banking industry worldwide. Not only will he have turned on its head the conventional wisdom that it is impossible to get away with a hostile takeover bid in the financial sector, but he will also have succeeded in opening up to Anglo-Saxon shareholder capitalism, the last bastion of post-war corporatism.
But since each of the two sides has the power to wound the other but neither packs the punch to deliver a knockout , the outcome is anything but certain. Sheila Garrard, French banks analyst at Lehman Brothers, believes that the most likely scenario is that BNP ends up with more than 50 per cent of Paribas but only a large minority stake in Societe Generale. In that case, it will be up to Jean-Claude Trichet, the pro-free market Governor of the Bank of France, to try once again to pressure SocGen into doing a deal with BNP, "for the greater good of France".
Although BNP has no desire to take over Paribas, having only bid for the bank because arcane French takeover rules require him to, Mr Pebereau will have killed off its plans to merge with SocGen, leaving the latter bank vulnerable and therefore more amenable to pressure to ditch its erstwhile partner and throw in its lot with Mr Pebereau's BNP.
This has been an extraordinarily messy and confusing struggle. Mr Pebereau has more than once in this affair been caught by his advisors musingabout how much better this would have been if fought under clear UK-style takeover rules. Instead, we have had a battle with too many rules, many of them apparently invented on the hoof by a plethora of regulators all vying for their place in the sun.
Over the past week, as the deadline looms, SocGen and Paribas have been piling on the pressure, by forcing shareholders friendly to their cause to come out publicly. So far, shareholders accounting for some 40 per cent of SocGen's capital have spoken out in favour. But many of them are French corporate entities like Pernod Ricard and Alcatel, who are bound by cross-shareholding arrangements which oblige them to support management. There is also a 12 per cent block owned by SocGen's employees who fear a takeover by BNP would lead to mass sackings, whatever BNP says about its intentions, and back management's preference for the SG Paribas merger deal.
Most soundings suggest that the international shareholder base, most of which is made up of either UK funds or US money managed out of London and which accounts for 40 per cent of the shares of all three banks, has been overwhelmingly in favour of BNP from the start.
SocGen and Paribas deserve some credit for having fought a good fight. What started out as a pretty transparent stitch-up to protect the position of Paribas chairman Andre Levy-Lang, has been honed with the help of teams of expensive bankers from Morgan Stanley and Merrill Lynch into a coherent merger scheme which aims to cut 1bn euros of costs and return substantial slugs of cash to shareholders in the coming years.
BNP is offering to do better - 1.27bn euros of savings. But some of the contradictions in its proposals which BNP had hoped to gloss over have not stood the test of five months of investor scrutiny as Mr Pebereau might have hoped. His attempts to pose as cost-cutting butcher when in London and New York while offering job guarantees to employees in France have come partly unstuck.
Investors have assumed that his talk of maintaining both the BNP and SocGen brands alongside each other is a short-term public relations ploy to be ditched when government and unions are looking the other way. In which case the savings would be much greater. They may be fooling themselves. "Reading between the lines we believe that this is the long-term strategy," says John Leonard at Salomon Smith Barney, "but our enthusiasm for the BNP project would be considerably greater if we knew this to be the case".
As a hostile bidder, BNP has also been hampered by its inability to deliver a knock-out blow. Financially, there is little to choose between them. Indeed BNP has yet to find away around the problem that its share offer for SocGen is effectively underwriting the SocGen offer for Paribas that it is trying to beat.
Investors hoping for a clear choice have thus been disappointed. Many suspect that from the outset BNP had always been playing for a draw.
Although Mr Pebereau has been unable because of capital constraints to blow SocGen and Paribas out of the water, he has always had two trump cards up his sleeve. One is the support of the French government, which sees BNP as the core of a national champion on the world stage. The other is the support of Claude Bebear, the scheming chairman of Axa, the insurance giant who holds the biggest single chunk of both Paribas and BNP, and has been batting for BNP since before the bid was launched.
If all else fails BNP has a loaded gun to put to the government's head. Mr Pebereau has made it clear that if he cannot take over Societe Generale or merge with Credit Lyonnais, the only option would be a deal with Dresdner, thus letting the Germans inside the city walls. It would be irony indeed if a bid launched to defend shareholders' rights was decided by politics. But then, helas!, this is France.