The merger battle among French banks Banque Nationale de Paris, Societe Generale, and Paribas has spilled onto New York's shores.
On Thursday, Societe Generale said it had filed petitions with the board of governors of the Federal Reserve System and the New York State Banking Department, arguing that Banque National de Paris should not get approval to acquire Societe Generale or Paribas.
In March, BNP made a $38 billion hostile bid for Societe Generale, which was about to complete its $19 billion deal with Paribas. If the three-way deal is completed, it would create the world's first trillion-dollar-asset bank.
Societe Generale's argument rests on Paribas' ownership of 22.7% of Finaxa, a French company that indirectly controls U.S. insurance firm Equitable Companies Inc., which directly controls New York securities firm Donaldson, Lufkin & Jenrette, which indirectly owns Winthrop Trust, a New York-chartered trust company.
"New York banking law prohibits any company from directly or indirectly acquiring 10% or more of a New York-chartered bank or trust company without the prior approval of the New York State Banking Board," Societe Generale's attorneys wrote in a letter to the Fed's board of governors.
"If BNP proceeds with their hostile takeover, which is scheduled to close on Aug. 6, they will be guilty of criminal offense under New York State law."
Robert Tortoriello, an attorney at Cleary, Gottlieb, Steen & Hamilton, which represents BNP, said: "This is the seventh spurious legal allegation that SocGen has done in the New York. Do I think this one is going to slow down the merger proceedings? Not even for a minute."