BNP Paribas, France’s largest listed bank, said on Wednesday it was no longer studying an offer for Société Générale, as the latter’s gamble that its independence depended on backing beleaguered chairman Daniel Bouton appeared to have paid off.
The news sent SocGen shares tumbling as the steam went out of bid speculation that has swirled around the bank since it revealed last month it had fallen victim to the industry’s biggest-ever rogue trading scandal. The bank was last month forced to launch a €5.5bn ($8.6bn) rights issue to restore its capital after losing €4.9bn on alleged unauthorised trades taken by junior trader Jérôme Kerviel.
It is understood that Mr Bouton’s presence at the helm of one of France’s oldest banks was a significant deterrent to BNP, which insisted any offer had to be friendly.
Although the current turmoil in financial markets makes conditions for any offer extremely difficult, and there remain concerns about SocGen’s trading in the first half, Mr Bouton’s hostility to any approach appears to have been a deciding factor.
The SocGen boss has been a staunch defender of the bank’s independence and fought a previous attempt from BNP to snatch control of SocGen in 1999. The bank’s board twice backed Mr Bouton at the height of the rogue trading crisis, despite widespread calls for his departure, saying that his presence was the best guarantee against a hostile offer at a time of weakness.
Shares in SocGen closed down 7.1 per cent at €62.44, while BNP rose 4.7 per cent to €60.76. BNP’s statement makes it less likely that a bidder will now emerge for SocGen. Potential predators such as Crédit Agricole, which is interested in SocGen’s investment banking arm, appear reluctant to move before the interim results, when the market will have a clearer view of how badly the scandal has affected the bank’s trading.
Investor nervousness about the market crisis will also be a big deterrent.
SocGen has been attempting to use the window offered by the market crisis to put its house in order after the successful conclusion of its rescue rights issue.
On Wednesday it announced a strengthening of its board with a new independent
non-executive director to replace Antoine Jeancourt-Galignani, the former Indosuez banker who has been on the bank’s board for 14 years.
Nathalie Rachou, an experienced banker and founder of the London-based asset management group Topiary Finance, will be proposed for a four-year term at the annual meeting in May.