Probably no significance was intended in the date chosen by the board of Caisse d’Epargne to give the green light for the merger of its investment banking and asset management businesses with those of Banque Populaire. But the superstitious among its rivals can only have had their anxieties intensified by the date, 06/06/06 – also chosen as the release date for a remake of horror classic The Omen.
The merged business, to be called Natixis, creates a new force in the French investment banking and asset management scenes that analysts and bankers are talking up as a credible challenger to national champions BNP Paribas and Société Générale to the extent that Calyon doesn’t even enter the conversation.
Valued at between €20 billion and €25 billion, Natixis will be comparable in size to the investment banking businesses of BNP Paribas and Société Générale, and its asset management business, with €534 billion of funds under management, will be the largest in France.
Caisse d’Epargne and Banque Populaire have pledged to keep their retail businesses separate but this is because, as mutual banks, they cannot be merged under French law. That does not mean, however, that they will not act in a coordinated fashion.
Sources close to the merger describe it as being fundamentally about the split between the production and distribution of financial services. The merger of the investment banking and asset management operations gives the businesses the scale they need to compete. In distribution, Natixis will benefit from access to both banks’ retail networks, which, together, have about 7,300 branches in France. BNP Paribas and Société Générale, by comparison, have just 2,000 and 2,600, respectively.
Both BNP Paribas and Société Générale were widely said to have been interested in Banque Populaire’s retail network, underscoring their desire to expand their domestic retail businesses.
It has been three years since Crédit Agricole shook up the French market by taking over Crédit Lyonnais, and the birth of Natixis can in many ways be traced back to that shockwave. And although, given the great success BNP Paribas and Société Générale are having with their independent strategies, it seems consolidation is unlikely to happen soon, bankers in France are once again starting to wonder if the two might not eventually get together.