The French invented the idea of a menage a trois. Now this concept is being extended to banking with the unexpected hostile bid by BNP to take over Paribas and Societe Generale and create Europe's largest bank by assets (though not by market capitalisation). The move would lock three large executive egos in an improbable embrace, when two of them had already agreed to a match.

A month ago, SocGen and Paribas agreed to merge. They worked out a relatively simple modus vivendi: Mr Daniel Bouton, SocGen's chairman and the country's youngest bank chief at 48, was willing to let Mr Andre Levy-Lang, chairman of Paribas, the consenting target, to be the chef de famille until his retirement in a couple of years.

Now Mr Michel Pebereau, chairman of BNP, has muscled in on this cosy domestic scene. He is offering an ill-defined, three-way arrangement for running the giant merged bank. Not surprisingly, Mr Bouton and Mr Levy-Lang have given him a hostile reception. If BNP's offer were successful, it would almost certainly be accompanied by a fierce battle for leadership of the merged entity. It would also create an even bigger French "national champion" in the pan-European banking business that is slowly emerging as a result of the single currency.

However, leading analysts doubt Mr Pebereau's initiative will go far enough for the question of leadership to arise. The hasty manner in which it was put together looks more like a desperate attempt to block the merger of Paribas and SocGen than a coherent project. The marriage had left BNP marginalised - and Mr Pebereau frustrated because he had his eyes on Paribas.

Executives at Paribas and SocGen say that the options they will now examine include: accepting BNP's bid; making a joint counter-bid for BNP; improving the terms of SocGen's offer for Paribas.

"The management at both banks is still recovering from the shock of the announcement," says a consultant familiar with the banks. "But I can safely predict that surrendering to BNP is the least likely outcome."

In setting up their defences, managers will, for once, enjoy support from the trade unions. With some 8 per cent of the bank's capital, SocGen's staff are the bank's largest group of shareholders.

Yesterday, the Bank of France, which regulates the banking industry, said it had a preference for "solutions that respect the smooth functioning of the market" - which seems to suggest that if the project were deemed to be causing unnecessary disruption, it would not be approved. However, whether BNP's offer is successful or not, it will shake up the French banking industry.