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France's Societe Generale and Paribas to Merge
Associated Press
PARIS — French banks Societe Generale and Paribas announced today that they will merge, forming a banking giant in a move that further streamlines the French and European financial services sector.

Photo
Remy de la Mauviniere/AP
Head of the French bank Paribas, Andre Levy-Lang, right, and the head of the Societe Generale bank Daniel Bouton, left, go over the $23 billion deal

The new group, to be called SG Paribas, will be the world's fourth-largest bank in terms of shareholder funds, at $23.9 billion.

The overall deal between Societe Generale, a banking group, and Paribas, an investment bank, will be worth $17.2 billion, officials said.

SG Paribas will be a leader in international investment banking activities, ranking among the world's top five in eurobonds, derivatives, and international trade finance.

Compared to its main European partners, France has been slow to consolidate its banking sector. The merger comes amid moves to float part of the Credit Lyonnais bank.

News of the merger — coupled with French insurer AXA Group making an offer today for rival British insurer Guardian Royal Exchange PLC — fueled a rise in financial services' shares in France and Britain.

Societe Generale has been on an aggressive shopping spree of late, acquiring Japan's Yamaichi International Capital Management Co., U.S. investment bank Cowen and Co. and a hefty stake in Asia Credit PCL in 1998 alone.

The new entity will have six main operating areas: retail banking, specialist financial services, asset management, investment banking, shareholdings and real estate.

In a public offer running Feb. 9-March 16, Societe Generale will offer five new Societe Generale shares for eight Paribas shares. Paribas said the offer represents a premium of around 17 percent for its shareholders.

The merger should see average earnings per share growth of 15 percent a year, Paribas said in a statement.

French Finance Minister Dominique Strauss-Kahn welcomed the merger, which he said would help the country's financial sector become "strong and dynamic" at the heart of the euro zone. The euro is the new, unified European currency.

"Our country must be able to count on companies (that) have the necessary means to develop nationally, in Europe and worldwide," the minister said.

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