BNP Paribas Raises Stake in Rival Credit Lyonnais

French bank BNP Paribas has scooped up an additional 5.32% of rival Credit Lyonnais on top of a 10.9% stake it bought from the government one week ago, Credit Lyonnais said Sunday.

Lyonnais, France’s No. 4 listed bank, said in a brief statement BNP Paribas disclosed the additional purchase, adding that the shares had been bought on the open market.

The announcement came a week after BNP Paribas stunned the French banking world by paying a hefty premium to buy the government stake in an auction. With the move, it became Lyonnais’ largest shareholder and upstaged other suitors such as Credit Agricole. The latest purchases would bring BNP’s total stake to 16.22%.

BNP Chairman Michel Pebereau last week denied any hostile intentions toward Credit Lyonnais, saying he wanted to establish a “close dialogue” with its management.

While BNP waits for its purchase of the government’s stake to be cleared by French banking regulator CECEI, analysts said the extra purchases boosted the chances of a fierce round of consolidation after three years of calm in French banking.

“It is clearly a blitz,” a French banking analyst said of BNP’s latest share purchase.

“This is going to be a battle of the big boys. BNP Paribas will have to state its intentions clearly because it would need the CECEI’s approval a second time to go over 20%,” said the analyst, who asked not to be identified.

A BNP spokeswoman confirmed that it had notified Credit Lyonnais of the extra share purchases but declined further comment.

Credit Lyonnais last week reacted icily to the unexpected arrival of BNP, the euro zone’s top listed bank by market value, as its biggest shareholder. At an emergency board meeting Tuesday, directors asked Chairman Jean Peyrelvade to find out BNP’s intentions.

Under French banking rules, BNP must inform the bank regulators of its intentions toward Lyonnais together with its request for approval of the outcome of last weekend’s state auction.

It was also expected to announce its ambitions toward Credit Lyonnais in a filing to stock market regulator CMF that must come within 15 days of the government sale being finalized.

French companies must launch a takeover bid once they reach 33% of a listed company’s capital.