War has been declared - the battle lines have been drawn. French bank BNP has targeted newly merged French competitors Société Générale and Paribas, but they don’t look like surrendering without a fight.
“It is certainly an impressive aggressive take-over bid “, says Stilianos Padelidakis, a buy-side financial services analyst at CPR Gestion, the French asset management firm.
“If successful, it would create the world’s largest bank. SBP (SocGen-BNP-Paribas) would also become the eighth biggest global money manager with around E330bn.”
However, Daniel Bouton, president of Société Générale, has warned he is considering a riposte - and time is on his side.
Given the regulatory approval calendar, BNP’s offer won’t start before April 5, or close until at least the end of May, provided there is no other competitive offer.
Most analysts see BNP in the driving seat, but the hostile bid in itself is a warning to expect the unexpected.
Should SBP be born it will harbour strong ambitions to be a leading global asset manager.
“Both SocGen-Paribas or the SPB merger have confirmed their intention to develop asset management to improve overall equity returns,” says Padelidakis. “In the case of Société Générale, it also means their US money management operation is no longer for sale.
“On the other hand, if SBP is born, asset management activities will develop in two directions: private banking - managing about E66bn (E26bn from SocGen, E24bn from BNP and E16bn from Paribas), and institutional fund management, with assets of about E264bn (E124bn from SocGen, E86bn from BNP and E54bn from Paribas).
The three existing asset management operations already achieve more than 30% returns on equity, but SBP’s ambition is to increase this to 60% by 2002. Gilles Pouzin