HSBC Bid for SocGen Would Have `Logic,' Merrill Says

HSBC Bid for SocGen Would Have `Logic,' Merrill Says


Feb. 6 (Bloomberg) -- HSBC Holdings Plc, Europe's largest bank by market value, could boost emerging-market and investment- banking revenue with a bid for Paris-based Societe Generale SA, analysts at Merrill Lynch & Co. said.

A combination of London-based HSBC and Societe Generale, France's second-biggest bank, would give HSBC high-growth units in North Africa and Eastern Europe and add equity derivatives to its corporate lending in Asia, London-based analysts led by John-Paul Crutchley said in a note today. Merrill has a ``sell'' rating on HSBC and a ``buy'' rating on Societe Generale.

HSBC might be able to pay as much as 126 euros a share for the French bank and move its headquarters to Paris, Merrill said. The combination would create the world's largest bank, and having it in Paris would be attractive to the French government, according to the note.

``We believe that an HSBC-SocGen combination could have industrial logic,'' Crutchley said. Acquiring Societe Generale also would help offset HSBC's ``problematic'' U.S. unit, he said.

BNP Paribas SA, France's biggest bank, said Jan. 31 it is considering a bid for Societe Generale, which cited a trader's errant bets for a record loss of 4.9 billion euros ($7.2 billion).

Societe Generale rose 6.4 percent to 84.28 euros at 12:45 p.m. in Paris. The shares are down 15 percent this year, valuing the bank at 39 billion euros.

A spokesman for HSBC wasn't immediately available for comment. HSBC fell 0.8 percent to 753 pence in London, valuing the bank at 89.4 billion pounds ($175 billion).

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