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BANK LOYALTY: SG employees gathered in front of the bank's headquarters in Paris on Thursday to protest against a possible takeover by BNP. Another French rival, Credit Agricole, is also considering an approach, while European giants such as BBVA Group and Banco Santander of Spain, UniCredit Group of Italy and HSBC of Britain are considered potential bidders. -- PHOTOS: AFP, REUTERS
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PARIS - INTEREST in bidding for the scandal-hit Societe Generale (SG) has heated up among its French banking rivals, but France has told foreign predators to stay away.
French banking group Credit Agricole has hired Lazard and its own investment bank Calyon to study an approach for SG, the Les Echos newspaper said yesterday.
A day earlier, BNP Paribas had confirmed an earlier report that it was studying the situation at the bank hit by 4.9 billion euros (S$10.2 billion) of losses - blamed on a rogue trader, which it tried and failed to acquire in 1999.
'We are studying it because all of Europe's banks are studying it,' a BNP spokesman said on Thursday.
Meanwhile, SG has hired Merrill Lynch and Rothschild to prepare a defence, according to Les Echos.
But European regulators in Brussels issued a stark warning to the French government on Thursday against any effort to thwart open competition to protect one of its corporate jewels.
'In previous banking cases, we made it quite clear that the government should not interfere by putting their national companies first,' Mr Charlie McCreevy, the European Union's internal markets commissioner, said through a spokesman.
'The rules on the free movement of capital and the legislation in place mean potential bidders must be treated in a non-discriminatory way in the situation of cross-border takeovers.'
Mr McCreevy was responding after several senior politicians hit the French airwaves on Thursday to make clear that Paris would not stand by and watch SG, weakened by the largest trading scandal in financial history, be wrested from French hands.
'The state will not remain just a bystander and leave SG at the mercy of any predator,' Mr Henri Guaino, a senior adviser to French President Nicolas Sarkozy, told French news channel BFM TV.
SG's huge losses, linked to the unwinding last week of tens of billions of dollars in unauthorised trades by futures trader Jerome Kerviel, have damaged management's credibility with shareholders and clients.
This has also stirred fears that a rival - French or foreign - could seize the moment to make a hostile bid for SG.
France's largest bank by market value, BNP - which made a failed grab for SG in 1999 - is seen by many analysts as the natural buyer. But several other European financial powerhouses, including BBVA Group and Banco Santander of Spain, UniCredit Group of Italy and HSBC Holdings of Britain, are also considered potential bidders.
BNP confirmed on Thursday that it was considering a bid for its French rival, though a spokesman dismissed speculation that any offer was imminent.
BNP's French pedigree gives it a political advantage in any bidding contest for SG. Analysts say the parts of SG's business that BNP covets most are its French retail banking network as well as its position as an innovator and global leader in asset management and derivatives trading.
But BNP and SG both have big investment banking businesses, and analysts said a merger could mean politically unpopular layoffs. It has prompted observers to suggest SG could be broken up, with the investment banking arm being sold to a foreign group.
At current share prices, a combined BNP-SG would have a market value of around US$146 billion (S$207 billion), which would easily make it the second-largest bank in Europe by market value after HSBC, which is worth around US$177 billion.
INTERNATIONAL HERALD TRIBUNE, REUTERS
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