BNP Paribas said Thursday it was considering an approach for Société Générale, its French banking rival – a move that would create a European banking powerhouse – but played down the likelihood of an imminent bid. Investors responded coolly to the news, driving down BNP shares 1.5%, valuing its equity at €59.6bn ($88.5bn). SocGen shares rose 1.7% to €83.20, valuing its equity at €38.8bn. Meanwhile, SocGen is planning to substantially reinforce its risk control systems, in a way that would shift power from the trading floor to the back office, and could rein in growth of its star profit generator, according to one director. SocGen is understood to have hired Merrill Lynch and Rothschild to advise on defence strategies, in addition to JPMorgan and Morgan Stanley, which are handling a €5.5bn emergency rights issue. Any offer for SocGen will have to wait until mid-next week, as the Bank of France requires eight working days’ notice before any bid is made for a French bank.

This entry was posted by Gwen Robinson on Friday, February 1st, 2008 at 5:28 and is filed under Capital markets, M&A. Tagged with bnp paribas, merrill lynch, rothschild, SocGen. Edit this entry.