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French bank BNP Paribas said yesterday that its board had not discussed the possibility of a bid for Société Générale, its high-stepping rival recently bought low by a rogue trader who cost it e4.9 billion (£3.6 billion).
A casual observer might take that to be a denial of interest, but later in the same statement the bank said with an elegance only the French could muster in such circumstances that "if at a certain stage, Société Générale management considers it intelligent to bolster the bank with a natural partner, there could be something to do".
In less elegant English, BNP Paribas is desperate for a deal but does not want to go hostile.
However, the restraint is more to do with pragmatism than propriety. Although SocGen chairman Daniel Bouton is a pillar of French corporate governance - their equivalent of the sainted Sir Adrian Cadbury, who wrote the original British code on that subject - the SocGen articles of association nevertheless contain more poison pills than the baggage of a KGB man on a short trip to London.
One of these articles - the poloniumflavoured special - says that an outside shareholder may be restricted by the board to just 15% of SocGen's votes, no matter how many shares that person or company may in fact own.
Another gives extra voting rights to the roughly 30% of shareholders who are designated as core on account of the length of time they have held their shares and been loyal to the board.
Other things being equal, this group should be even more influential after the completion of the current rights issue because 10% of the register - shares held by employees - are not being offered new shares. The others will therefore get slightly more than a pro rata allocation.
That dual-voting core group is a pretty big hurdle for an aggressor to overcome, meaning in effect that a bidder would need to get 70% of the shares outstanding to secure 51% of the votes.
But even if a hostile bidder got to 51%, it could still have its shareholding disabled by the board so it could exercise only 15% of the votes, which is not enough to influence anything, let alone oust the board and take control - and that is why a straightforward hostile bid would not work.
So that means BNP Paribas is somehow going to have to bear-hug the Soc-Gen board into submission - appearing so overwhelmingly polite and generous and friendly that SocGen really cannot refuse its Gallic charm.
This promises to be an intriguing and very French seduction. But it also underlines that, though the post of suitor to SocGen is vacant, non-French banks need not apply. ONE of the most astonishing things about The Last Tycoons, the recently published book that tells the inside story of Lazard, is how well Jon Wood comes out of it.
The former UBS trader now runs Monaco-based hedge fund SRM Global, which has built up a stake in Northern Rock. He has a hard-earned reputation for single-minded ruthlessness, which he showed to good effect in his aggressive dealings in the shares of companies associated with Lazard.
He also starred in the celebrated High Court battle with Sir Tom Hunter in 2005 when the pair fell out over a private deal to buy a now-bust shopping business. We might assume UBS did not take kindly to one of its staff dragging a favoured client through the courts on a private matter in such a colourful fashion because he left the bank soon after. However, against the massive egos on display in the Lazard book, he managed in comparison to appear quite human.
But everything is relative, and he is certainly not the warm, cuddly shareholder Northern Rock directors might prefer to have on their books in these troubled times. Indeed, they have taken comfort in the fact that he would cap his shareholding at 9.9%, because the law specifies that no one is allowed to own more than 10% of a financial institution without being authorised as a "fit and proper" person by the Financial Services Authority. It was generally believed Wood had never sought such authorisation. And, of course, it is not something that is guaranteed when one does apply.
So City tongues began to wag last week when he pushed up his shareholding to 10.77%. There has been no announcement from the FSA that he has been authorised, although there are rumours that he has applied. Could this mean that he is breaking the criminal law and will shortly be dragged off in irons?
Dream on, however much you might cherish such a moment. Although the FSA refuses to comment on matters such as these, it is known to have a system whereby if it is notified in advance, it can give clearance for unauthorised people to go above 10%. Given that Wood is not under arrest, that presumably is what has happened this time.
