The proposed merger between France's Banque Nationale de Paris, Societe Generale, and Banque Paribas offers what is almost a textbook model for an in-market deal.
"As a domestic cost-cutting story, it's fantastic," said Daniel Davies, a banking analyst with Robert Fleming Securities in London.
"This proposal has too much commercial sense to be ignored."
The proposed merger would not only create a large, strongly capitalized institution, it would present enormous opportunities to eliminate duplicate costs and boost profits by the three institutions, analysts and BNP executives said.
They added that it would also trigger further consolidation within French banking, something which has been long overdue.
SBP, as the proposed group is being called, will have "higher earnings and growth potential than Societe Generale, Paribas and BNP on a stand alone basis," BNP said in a release Wednesday.
It added that the combined entity would also be a blue-chip stock, providing investors access to one of the largest capitalizations in Europe.
The merger would create an entity with more than $1 trillion of assets and more than $50 billion in market capitalization. In France, it would have more than 4,700 branches, 5,100 ATMs, 11 million retail customers and commanding market shares in deposits, lending and mutual funds.
It would do business with 700,000 corporate customers across 80 countries and combined employees of 128,000.
BNP added the new bank would also be able to eliminate an estimated $1.26 billion in annual operating costs, allowing the combined group to post a return on equity of more than of 16% in 2002.
It predicted a compounded annual earnings per share growth rate of approximately 15% between 1999 and 2002.
