Banks saga draws to uncertain close

The biggest take-over battle in French banking history was scheduled to end at midnight last night, the deadline for swapping Banque Nationale de Paris, Societe Generale and Paribas shares. The results of the acrimonious six-month struggle to create France's largest bank and one of the top 10 banks in the world should be known on August 17th.

There was uncertainty yesterday, with some investors saying they would wait until the Bourse closed to decide what to do. The financial saga involves three separate takeover attempts: SocGen's friendly offer for Paribas shares and BNP's subsequent hostile bids for both SocGen and Paribas.

The chief protagonists, BNP and SocGen, prematurely claimed victory in hopes of persuading shareholders to side with them. "The last checks we carried out show that more than half of the capital of Paribas should be brought to the Societe Generale by long-term investors," Mr Daniel Bouton, the chair man of SocGen, told Les Echos, France's leading financial daily.

Mr Bouton was contradicted in an interview on the opposite page by his rival, BNP chairman Mr Michel Pebereau). ". . . the BNP received . . . declarations of intent . . . which represent 50 per cent of the capital of Paribas," he said.

With SocGen and BNP issuing conflicting statements, Mr Andre Levy-Lang, the chairman of Paribas, mused earlier this week that Paribas "would be the only bank in the world with 150 per cent capital".

The Commission des Operations de Bourse, the French stock market regulator, yesterday warned the public against believing either Mr Bouton or Mr Pebereau.

Individual shareholders - 400,000 at Paribas and 300,000 at SocGen - carry an unprecedented weight in this take-over battle and they are understandably confused. The chairmen of the three banks have given more than 100 interviews and spent an estimated 180 million French francs (€27.44 million) on advertising campaigns - some with piggy-bank graphics - designed to seduce small investors.

Euro-RSCG, France's biggest public relations firm, is one of the main beneficiaries. SocGen and BNP hired two Euro-RSCG subsidiaries, located two floors apart in the same building, to represent them.

The delay in counting is caused by the requirement that all shareholders issue instructions in writing, not electronically. Brokerage firms and other financial intermediaries have until August 13th to communicate the results to the Paris Bourse.

If SocGen gains more than 50 per cent of Paribas, the two banks will merge as planned on August 18th and French authorities will decide what should happen to BNP's minority share of SocGen.

If BNP wins more than 50 per cent of Paribas, Mr Pebereau says his plan for a three-way merger called SBP - creating, by some criteria, the world's largest bank - will then go ahead. He claims that obtaining a third or more of SocGen's voting rights would constitute "effective control" of his rival.

This is disputed by Mr Bouton and would be decided by a committee chaired by Mr Jean-Claude Trichet, the Governor of the Banque de France.