SocGen Prepares Strategy as Bidder Field Widens

By Pascale Denis and Mathieu Robbins

PARIS/LONDON (Reuters) - Societe Generale (SOGN.PA: Quote, Profile, Research, Stock Buzz), the French bank hit by a rogue trader scandal, was studying bid defense options on Friday as it emerged a second domestic rival is working with advisers to consider a takeover.

Shares in SocGen rose 5.5 percent on Friday after a report in Les Echos newspaper, confirmed by a source familiar with the matter, that Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz), France's third-largest bank by value, is working with Lazard and its own investment bank, Calyon, to study a bid.

Credit Agricole, the biggest bank in France in terms of retail branches, and Lazard declined to comment.

BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz), France's biggest listed bank, confirmed on Thursday it would look at making an offer for SocGen, the number two player, which was weakened last week when it revealed 4.9 billion euros ($7.3 billion) in trading losses it blamed on a single rogue trader, Jerome Kerviel.

BNP failed in 1999 to buy SocGen, which now has a market value around 40 billion euros, and since the trading scandal broke there has been speculation of a joint bid in which Credit Agricole would take SocGen's investment banking arm and BNP its retail business.

The bank is assessing a possible bid with help from investment banks Goldman Sachs, which advised it on its 1999 Socgen bid, and Lehman Brothers.

SocGen has said it is determined to stay independent, and on Friday a source familiar with the matter said it was studying how it could avoid a low-priced takeover.

"Provided there are no other bad surprises, it would be easier for SocGen's board to do a deal once the water is calmer," said the source. "There would be a backlash if they feel people are just trying to buy them on the cheap."