Paribas and Société Générale merge

Download article in original language : FR9902160NFR.DOC

On 1 January 1999, the French banks Societé Générale and Paribas announced a merger, taking the form of a security swap from 1 February 1999. All the trade unions are concerned about the impact of the merger on jobs, despite management assurances that there will be no forced redundancies in France.

On 1 January 1999, the Societé Générale and Paribas banks announced that they were to merge, in the form of a security swap to take effect on 1 February 1999. The merger was applauded by the financial press as the springboard for a process of restructuring in the French finance sector, which had hitherto been relatively unaffected by the vast process of concentration which has recently affected the industry worldwide. The new group is the fourth largest in the world in terms of stockholder's equity and has a workforce of 80,000, of whom 30,000 are employed outside France.

The trade unions view this increase in size as a positive step, given the prevailing competitive environment (according to CFTC) and also welcome the fact that it is two French companies which are merging (CGT). A positive factor for maintaining jobs is the fact that the banks complement each other, especially since there is no competition between them in the area of retail banking. Nevertheless. duplication does exist in consumer credit services (900 employees at Franfinance and 4,100 at Cetelem) and in asset and portfolio management (365 employees at Société Générale Asset Management and 140 at Paribas Asset Management). Management has given assurances that there will be no forced redundancies in France. However, job losses will have to take place in the financial markets outside France, in particular in London where a cut of almost 800 in the two companies' combined workforce of 4,100 has been suggested. Apart from the above, the temptation to challenge past compromises (raised by CFTC), to make structural savings (CFE-CGC) and to introduce full-scale reorganisation in order to strengthen control and influence and make savings in employment (CGT-FO) are subjects of concern to the unions.

In general terms, CGT and CFDT have repeated a call for a national debate - in the form of a round table - on the future of the finance and banking industry. CFDT believes that the government should intervene to ensure that jobs are maintained and that the needs of customers are met. As far as strategy is concerned, CFDT laments the priority given to the activities of financial markets, which are seen as a factor which weakens the banking industry financially.

A forum for consultation and follow-up on the merger has been established, made up of members of the two banks' management and between two and three representatives from each union, which will set up working groups on particular issues. CFDT, CFTC, CGT and CGT-FO support the principle of such a dialogue process. The new group's management has also let it be known that it wishes to undertake a "complete review" of social issues.