BNP eyes struggling Société Générale
French bank BNP Paribas admitted on Thursday it had its eyes on crisis-hit Société Générale. Meanwhile, France's government attracted criticism from the European Union for vowing to ward off hostile bids.
French bank BNP Paribas revealed Thursday it had its eye on crisis-hit Societe Generale, while voices in the European Union were raised against France for vowing to ward off hostile bids.
Societe Generale is fighting to discourage potential takeover bids and raise 5.5 billion euros in fresh capital, a week after announcing losses of 4.8 billion euros (7.1 billion dollars) blamed on a rogue trader.
A spokeswoman for BNP Paribas, France's top bank, said on Thursday it was considering making a bid: "We are thinking (about it), simply because all of Europe is thinking about it," she said.
Foreign banks including Britain's HSBC and Barclays, Germany's Deutsche Bank, Spain's Banco Santander and Italy's UniCredit have all been cited as potential bidders for the bank.
But there has been rising speculation the French government is planning to back a merger between BNP Paribas and Societe Generale to preempt a foreign takeover.
Prime Minister Francois Fillon fired a warning shot Tuesday, insisting Societe Generale should remain a "great French bank" and that the government would fight off "hostile raids."
BNP is in a position of strength after reporting a record estimated profit of 7.8 billion euros for 2007. According to the business daily Les Echos, BNP has already drafted in advisors and is actively preparing a bid.
The bank's chairman Michel Pebereau met in recent days with advisors to President Nicolas Sarkozy, although BNP denied they discussed Societe Generale.
Shares in Societe Generale shot up 3.36 percent after BNP's remark to 84.55 euros, after two days of consecutive gains fuelled by the takeover talks.
But Sarkozy's office insisted a takeover was "not on the cards."
"For the time being, it is not an issue, since as far as we know Societe Generale is under no obligation to seek a tie-up," said presidential spokesman David Martinon.
The European Commission has warned France not to discriminate against foreign banks in the event of a takeover, and the chairman of the Eurogroup of finance ministers, Jean-Claude Juncker, repeated the warning on Thursday.
"I would fully understand the wish to exclude from the game those who nourish hostile feelings towards France and Societe Generale," Juncker told Europe 1 radio.
"If someone friendly comes forward with a strong economic project to offer, why refuse it? Simply because it is not French?"
But Sarkozy's close advisor Henri Guaino repeated the state would "intervene if it considers it necessary" to protect its flagship bank.
"The state will not just stand by and watch," Guaino told RMC/BFM-TV. "We will not leave this company at the mercy of any old predator."
"Every time there is an attack on the banking system, every government in Europe is active, they intervene... France is just like the others."
Fighting a storm of criticism over the rogue trading scandal, made worse by two billion euros of losses in the US subprime loan crisis, the board of Societe Generale decided Wednesday to keep chairman Daniel Bouton in place.
Bouton successfully fought off a hostile takeover from BNP Paribas in 1999 and said Wednesday he was confident the bank could preserve its independence.
A board member at the bank told AFP however that Bouton had said a friendly takeover offer should be "examined." The bank denied Bouton made such a comment.
Societe Generale accuses 31-year-old trader Jerome Kerviel of stealing computer codes and falsifying documents to place more than 50 billion euros (73 billion dollars) in futures trades.
Kerviel has been charged with falsifying documents and unauthorised computer access. He has told prosecutors that his bosses must have been aware of his dealings because of the profits he was generating.
In the latest development, a judicial source said Thursday that French police seized a personal computer belonging to Kerviel during a search of his brother's apartment on Wednesday.
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