Employee hostility play part in failure of BNP-Société Générale merger

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In late August 1999, France's Credit Institution Council ruled against the attempt by the BNP banking group to merge with Société Générale. In addition to the position of the financial markets, the opposition of employees played a role in the Council's decision.

In March 1999, BNP launched a bid to acquire a major interest in another French-owned bank, Société Générale (FR9903169N). However, in late August the Credit Institution Council (Comité des Etablissements de Crédit, CECEI) ruled against BNP's bid.

The major part in scuppering the project was played by the financial markets, which failed to arrive at a unanimous decision on the positive nature of the proposed merger: the percentage of Société Générale shares (31.8%) involved in BNP's stock-for-stock takeover bid (Offre publique d'échange, OPE) would not have made it possible, under French legislation, for BNP to take control of Société Générale. Thus, in the face of the lack of clear-cut action from the financial markets, it fell on the CECEI to take the final decision. It was at this point that the anti-merger movement created by Société Générale employees played a role.

Société Générale employees had shown themselves to be hostile to the plan very early in the bid, by closing Société Générale branches in protest on 22 April 1999. However, following this initial action - which was perceived in some quarters as being manipulated by management - no grassroots anti-merger organisation structure was set in place. Any trade union action against the BNP bid would have run the risk of being seen as unconditional support for Société Générale's president, Daniel Bouton, who was opposed to the merger. Only rather belatedly, two days prior to the CECEI decision, did a movement led by the rank-and-file develop throughout Société Générale. This took the shape of a strike on 26 August, followed by a delegation to the Banque de France and a demonstration held on 27 August. The industrial action was spearheaded by four out of the five trade unions represented at Société Générale - CFTC, CGT, CGT-FO and SNB-CGC. CFDT did not take part, on the grounds that it felt the incumbent management's policy to be just as "anti-social" as that put forward in the merger plan. The final element in the rather uncohesive across-the-board rejection of the plan by employees was the resistance of managerial staff, who had formed an "anti-raid association" at the outset of the BNP bid.

The major argument against the BNP plan was the job losses that it would have brought about. The French authorities are particularly sensitive to this issue, as demonstrated by the BNP's planned takeover of CIC in 1997 (FR9804104N) and Crédit Immobilier de France's attempt to acquire Crédit Foncier de France in 1996, both of which floundered in the face of employee hostility.

Ultimately, although the unions were not consulted at the outset by the public authorities - which they had been during privatisations in the banking sector - the employees' position was in fact finally taken into consideration because of the need for a political decision imposed by the division and uncertainty of the financial markets.