French takeover shows three into one may go

In a move likely to lead to renewed calls from the National Australia Bank for a relaxation of the four pillars banking policy, Banque Nationale de Paris has announced a move to takeover not one, but two of its French domestic rivals.

Societe Generale and Paribas have already agreed to merge, and the BNP bid is no doubt designed to head off what would have been a significant threatt to their existing leadership position.

Calls for rationalisation of Australia’s banking industry will intensify as a result, and we suspect that sooner or later Canberra will relax the current policy. Whilst there will be greater cost efficiencies, the flow on effects to customers may not be in the form of lower charges or higher service levels.

These benefits normally flow from greater competition, not less.