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