* Government seeks consortium to buy 34 pct joint stake
* Banks resist, citing capital rules, regulation, taxes
* Smaller stake of 10-15 pct possible-source
* Euronext IPO unlikely this year-source
By Sophie Sassard and Jean-Baptiste Vey
LONDON/PARIS, April 5 The French government has
approached the country's banks and insurers about forming a
consortium to buy at least 34 percent of the Euronext stock
exchange, due to be spun off in a public offering, sources close
to the matter said on Friday.
But banks, whose latitude for making such investments has
been reduced by looming capital rules, are resisting the
government's entreaties, the sources said.
"On top of these objective considerations, it is also true
that no financial institution is eager to please the government
after the tax burden they imposed," a senior financial
institutions banker said.
French lenders and the Socialist government of President
Francois Hollande have been at odds over several issues,
including taxation and regulation, although the banks succeeded
in softening a threatened crackdown.
The government is keen on stopping the exchange, now part of
NYSE Euronext, from falling into foreign hands, a concern some
banks share as it could leave them in a weaker position to win
mandates for the listing of major French companies.
A source close to French Finance Minister Pierre Moscovici
told Reuters it was important that France retain a clear
influence over Euronext "one way or another".
"It's too important for us to act like we are totally
neutral about it," the source said.
The Treasury has been in touch with the French banks but
they have shown little enthusiasm so far, the source said,
adding that the dossier was at an exploratory stage.
IntercontinentalExchange agreed to buy transatlantic
market operator NYSE Euronext for $8.2 billion in
December. It has committed to float its European
activities, Euronext, in order to secure regulatory approval.
ICE is keen to list as much as 50 percent of Euronext, an
unusually large stake for an initial public offering, as it
needs to refinance NYSE's acquisition, said one of the people
involved in the talks, who asked not to be named.
Euronext includes the Paris, Amsterdam, Brussels and Lisbon
stock exchanges. The French government is also seeking to bring
banks from the Netherlands, Belgium and Portugal to the
While buying a 34 percent stake looks challenging, there
could be a rationale for French and European banks to hold a
smaller stake - around 10 to 15 percent - and have a say in the
exchange's strategy, a second source close to the deal said.
"If Euronext ends up under non-European command, that would
be bad news for European banks," said a source involved in the
talks. "If all of a sudden, all CAC 40 companies are listed in
Singapore or somewhere else outside Europe, French banks won't
be the best placed to conduct IPO and capital raising.
"That would significantly dent their investment banking
Sources have told Reuters the exchange would also consider
selling Euronext as an alternative to a stock offering. Deutsche
Boerse and the London Stock Exchange Group
are among potential buyers, the senior banker said.
While bankers view a merger with Deutsche Boerse as the best
strategic option to create a truly European player, that option
does not seem to be high on the French government's agenda.
"You can see it as a resurgence of French nationalism," one
of the sources said.
Private equity buyers who have invested in exchanges in the
past could also be interested in taking a minority stake in
Euronext, either alone or within a consortium.
These funds would include Silver Lake, a former stakeholder
in what is now Nasdaq OMX Group, and TA Associates,
which used to own electronic credit derivatives trading service
Crediex. Sources say another candidate is AnaCap, which has set
up a joint venture with Blackstone to hunt for deals in
Europe's banking sector.
Two of the people said France could itself take a minority
stake in Euronext as a last resort through state bank Caisse de
Depots or sovereign wealth fund FSI. The government helps
regulate Euronext so could set limits on its future ownership.
BNP Paribas and Credit Agricole declined
to comment, while Societe Generale did not return a
call seeking comment.