Societe Generale (SG) has come out of its failed merger with Paribas as a stronger group after being forced to explore new avenues. SG Investment Banking chief executive Xavier Debonneuil, speaking from the firm's Hong Kong headquarters yesterday, said the company was well-positioned to compete in a tougher operating environment despite the merger breakdown. 'If we look back, of course, we are disappointed to not have concluded the deal with Paribas,' Paris-based Mr Debonneuil said. 'But we have come out of the battle a lot stronger.' In the middle of last year, Banque Nationale de Paris won control of Paribas in a double takeover bid, shutting SG out of its merger plans with Paribas. At the time, SG chairman Daniel Bouton said the group would seek European partnerships following the breakdown of the deal. Now on its own, the question begs as to how SG is going to compete on a global scale with the increasingly powerful United States houses dominating the larger deals. Since the merger battle, SG had forged alliances within Europe and aimed to grow through further alliances, Mr Debonneuil said. An example is its cross-border alliance with Banco Santander Central Hispano, combining production and distribution capabilities. Santander employs SG's strengths in Asia, while SG uses Santander's presence in Latin America. 'If we want to get the best profit, we have to leverage on the largest possible customer base,' Mr Debonneuil said. 'And if we look at our results at the end of 1999 - though we had a disturbed year - we come out with the best return on equity . . . and way above Paribas.' He cited SG's presence in Europe, global industry groups and an integrated business model. He said there was probably a message being sent by big investment banks in the US that there was only room for them. 'The larger investment houses . . . do not have the franchise that we have in Europe.' Mr Debonneuil said SG's investment banking operations did not want to compete for giant mergers such as Vodafone AirTouch and Mannesmann, 'but mid-cap . . . there we're on an equal footing, if not better'.
