SocGen could still escape a takeover

By Andrew Hurst - Analysis

PARIS (Reuters) - Societe Generale's (SOGN.PA: Quote, Profile, Research, Stock Buzz) survival as an independent bank has been thrown into doubt after it lost 4.9 billion euros ($7.2 billion) in a rogue trader scandal but France's number two lender may still escape the clutches of a predator.

The reason is simple: Rarely has there been a better time for a bank to guard its independence and ward off suitors.

A global credit crisis, triggered by a meltdown in U.S. subprime mortgages, has driven up capital costs, stretched balance sheets as many banks take charges on exposures and dramatically reduced the risk appetite of bankers.

All of which could play into the hands of Daniel Bouton, SocGen's independent-minded executive chairman, as criticism rains down on him over the bank's handling of the affair, setting off speculation that SocGen is in play.

"I think one bank going for another bank will be tricky because the credit risks have been spread by the subprime crisis and that impacts everybody," said Ian Harnett at Absolute Strategy.

A French investment banker who spoke on condition of anonymity expressed a similar view: "There are far fewer candidates to go out and buy a bank because a lot of them are busy cleaning up their own shop."

SocGen has blamed losses on Jerome Kerviel, a 31-year-old trader who secretly placed huge bets on future movements of stock market prices while skirting around the bank's sophisticated systems.

Talk of a takeover by another French bank, BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) or Credit Agricole (CAGR.PA: Quote, Profile, Research, Stock Buzz) has been set ablaze by the dizzying fall from grace of SocGen, which has acquired a global reputation for innovation in financial derivatives.