La Poste, SocGen in consumer credit deal talks

The logo of French bank Societe Generale is seen at the entrance of its headquarters in La Defense, outside Paris, January 31, 2008.

PARIS (Reuters) - France's Post Office bank said it was in exclusive talks with Societe Generale (SOGN.PA) to provide consumer credit, in a deal which could boost SocGen's retail bank business and La Poste's plans for privatization.

"A conclusion of a definitive agreement will be reached before the end of the year," La Banque Postale said in a statement on Thursday.

A consumer credit partnership would help SocGen as the French bank strives to bounce back from a rogue-trading scandal earlier this year, while the move also comes amid plans to privatize La Poste.

SocGen, France's second-biggest listed bank, and La Poste had already signed a joint-venture agreement for processing electronic payments last year.

Lehman Brothers said in a research note earlier this week that a deal with La Poste would help boost SocGen's Franfinance consumer financing arm but was unlikely to have a material impact on the group.

"The effect of the joint venture is unlikely to be very material for SocGen over the time horizon of our estimates, given that distribution of consumer finance products would not start before end 2009/beginning 2010 and the learning curve is likely to be slow and risky," it said.

Lehman added, however, that the deal would help SocGen compete with the larger consumer-finance businesses of its rivals, such as BNP Paribas' (BNPP.PA) Cetelem division and Credit Agricole's (CAGR.PA) Sofinco arm.

Earlier this week, a trade union leader said La Poste had told unions of plans to sell off 20 percent of the company next year in a partial privatization.

The move is aimed at preparing La Poste for the opening up to competition of European post markets in 2011.

Confirming media reports, a source told Reuters this week that such a move would value La Poste and its mail-to-banking business at 10 billion euros ($15.7 billion), half the value of its equivalent in Germany which France views as a threat as Europe gears up for the liberalization of the postal sector.

The French post office is one of the country's largest employers with 280,000 staff, of whom more than half are civil servants.

(Reporting by Sudip Kar-Gupta; Editing by Quentin Bryar)