BNP, shunned by Lyonnais as a predator and displaced by Agricole as Lyonnais' biggest shareholder, said on Friday it would not stand in the way of an "acceptable" Agricole bid for Lyonnais.
Credit Agricole, the French bank, is poised to announce a €20 billion agreed bid in cash and shares for Crédit Lyonnais today after a three-week battle with BNP Paribas, say bankers in Paris.
The boards of both Agricole and Lyonnais met last night with the aim of approving the deal before a formal announcement this morning.
Bankers expect Crédit Agricole SA (Casa), which floated a year ago as the listed company at the heart of a powerful network of 48 regional mutual banks, to offer about €54-€58 a share for Lyonnais in the latest move towards consolidation among European banks.
But BNP executives have not ruled out a counterbid if Agricole offers too little, and they are urging Lyonnais shareholders and staff to look closely at the merger plans and the impact on jobs, as well as the offer price.
One BNP executive said last night: "We're keeping all our options open."
Agricole faces an uphill task in convincing Lyonnais employees and its own shareholders of the merits of a Lyonnais takeover.
Casa must also be certain of the support of its caisses regionales since they will be supplying most of the cash and will have their control of Casa diluted by the share issue.
At least 60 per cent of the Agricole offer price is expected to be in cash. Casa will argue that the urban retail bank branches of Lyonnais complement Agricole's primarily rural network in a way that will minimise job losses, while allowing cost-savings in the back office.
A merger would also combine the relatively small investment banking operations at Lyonnais and Crédit Agricole Indosuez.
Banking analysts, however, believe a BNP-Lyonnais deal would allow more cost-savings than the proposed Agricole-Lyonnais tie-up, particularly since the various caisses regionales that make up Agricole operate independently and are only one-quarter controlled by Casa.
An Agricole-Lyonnais combination could also set alarm bells ringing at the European Union's competition authorities, since Agricole already has 22 per cent of the French retail banking market. Lyonnais would add a further 7 per cent share.
Agricole has owned 10.5 per cent of Lyonnais since the smaller bank's privatisation in 1999. It negotiated on and off for three years to buy the state's remaining 10.9 per cent stake to give itself a dominant 21 per cent.
In November, however, Agricole turned down a government offer to buy the state holding for €44 a share.
The finance ministry then initiated an auction, which was won by BNP with a costly €58 per share bid.
BNP now owns 16.4 per cent of Lyonnais and Agricole has 17.4 per cent. (Financial Times service)
