French banks Paribas and ■Societe Generale are to merge, creating one of the, largest European banks with a market capitalisation of nearly 30bn euros (S34bn, or £20bn)

The new group will overtake Credit AgricoIe Io become the largest banking groin) in France, and the world's fourth largest, with profits last year of 2Jw euros ($2.4bn. £1.4bn).

It is the latest in a series of moves lowards the consolidation of the European banking industry that has been stimulated by the introduction of the single currency,

Societe Generale is offering five shares for every eight Paribas shares, giving a premium of 17% over the" current Paribas share price.

The new group will be called SG Paribas, and Paribas chairman Andre i.evy-Lang will

initially head the new group. He will be succeeded in 2002 by Societe Generale chairman Daniel Bouton.

Although the two banks are largely complementary, with Paribas specialising in investment banking and Societe Generale in the retail sector, there could syll be job losses. The new group says it will take a Ibn euro ($1.14bn, £700m) re-Structuring charge in order to raise its return on equity to 15 per cent.

The group expects to make savings of 800m euros from the merger by 2001.

Merger wave

The banking merger wave has been gathering pace in Europe since Switzerland's two largest banks. UBS and SBC. Jpiried forces one year ago.

— BBC Internet