French bank Societe Generale is reportedly looking into making a bid for its larger domestic rival BNP Paribas. That would create a European banking giant which, in terms of market capitalisation, would be just behind the region’s number one – Britain’s HSBC.
Societe Generale’s chief executive, Daniel Bouton, has hired two US investment banks to assess an approach, according to a report in the newspaper Les Echos. BNP’s market value of 82 billion euros makes it 20% bigger than Societe Generale whose shares are worth a total of 66 billion euros. Credit Agricole and CiC make up the rest of the top four in France.
Any approach might well have to be hostile as BNP Chief Executive Baudouin Prot said last month his bank was not interested in a deal with Societe Generale adding that such a tie-up would have “huge execution risks.” A merger could also be politically controversial as it would result in major job cuts from the two lenders’ overlapping branch networks.
The Bank of France would have to sign off on any deal and in recent years it has only approved friendly – rather than hostile – takeovers. Analysts said investors would prefer a cross border tie-up, perhaps with Italy’s UniCredit.