The new SG Paribas has a significance beyond its size. It also shows what France will do–and won’t do–as it evolves from its own species of capitalism to something more like the U.S. variety. Paribas is mainly an investment bank, and doesn’t overlap Societe Generale’s businesses much–leading some analysts to argue out that a better partner for SG would have been its retail rival, Banque Nationale de Paris. That deal would have offered great scope for boosting profits by cutting costs–in other words, firing lots of people. But for precisely that reason an SG-BNP combination would have been opposed by the government, which quickly blessed Societe Generale’s union with Paribas.
In other ways, the new bank reflects the merger game exactly as it’s played in the U.S. The deal comes partly because of pressure from Paribas’s biggest shareholder, insurance giant Axa. Not that French CEOs are left entirely to the mercy of the market. As even bosses in America tend to do, Paribas chairman Andre Levy-Lang and SG CEO Daniel Bouton will merge without threatening their own job security. Levy-Lang, 61, will be the new bank’s chairman until he retires in 2002; Bouton, now 48, will succeed him.
And so France becomes more capitalist, yet still not fully so. Privatizations have continued (albeit with some interruptions) since 1986. About a third of the Parisian Stock Exchange’s capital is held by foreigners. A new breed of small stockholders owns much of the rest, directly or through different kinds of mutual funds. But the French have real problems with this new, schizophrenic idea of a working-man/stockholder. They are constantly seesawing between the choice of a raise or an increase in share value. There has been endless debate on reducing the taxation of stock options. Political leaders from both the left and the right still oppose the creation of pension funds, even though voters seem to want them.
The merger of SG and Paribas is a milestone in France’s journey, but it is not a place to rest. More deals–in banking, and in nearly every other sector–will surely come. Their terms will tell us more about the kind of capitalism France is developing–and how it will fare in competition with the varieties being perfected elsewhere in Europe, and around the world.
