The price of shares in three French banks involved in a massive and bitter takeover battle rose sharply again after the banks had rejected pressure from the authorities to compromise in the national interest.
The decision by the BNP, Societe Generale (SG) and Paribas banks was seen as marking a return to the takeover ring after an imposed pause, and as a notable setback for the authorities.
The governor of the Bank of France, Jean-Claude Trichet had said that he envisaged no other outcome but a consensus and Finance Minister Dominque Strauss-Kahn said that the banks had to be "pushed" to a deal in the national interest.
The board of BNP met on Tuesday and many analysts now expect the bank to increase the value of its offer.
A banking analyst with Deutsche Bank in London, Eric Halet, commented: "The situation will now be decided by the market, and from the point of view of investors this is a good thing because interference by the Bank of France would have meant some form of sweetening of the deal to the detriment of shareholders.
"But from the point of view of the Bank of France it is a bad thing because it now looks like it no longer has the power to intervene and control things."
A trader with Cholet-Dupont, Bernard Duchene, said: "Investors are clearly happier with the market's ability to arrive at a solution than with the Bank of France.
"It's perfectly natural that they (the share prices) should come back so strongly now that investor confidence has returned."
The government has warned the parties not to involve foreign banks, even though foreign investors already own nearly half of the three protagonists.
These investors have been angered by the intervention of the authorities which had the effect of smothering expectations of a bidding war.
The total capitalisation of the three banks fell by €6.5 billion or by 11 per cent in a week after the central bank had intervened.
It is widely believed that the CECEI bank-licensing body, which is chaired by the governor of the central bank, Jean-Claude Trichet, will now declare that a counter offer by SG meets regulatory conditions.
