While Societe Generale and Paribas want to merge with each other, BNP has proposed a link-up between all three of them.

The banks' three chairmen met at the Bank of France on Wednesday - according to insiders the first official meeting after a series of secret and informal talks.

The French authorities are hoping to find an amicable solution to the increasingly bitter merger battle.

Governor talk

Societe Generale's managers say a three-way deal is against the interests of shareholders

The governor of the French central bank, Jean-Claude Trichet, is amongst those trying to find a solution.

"The governor held a working meeting ... with the chairmen of the three establishments concerned," said, a spokesman for the Bank of France, adding that talks would continue in the coming days.

The boss of Society Generale, Daniel Bouton, and Paribas chairman Andre Levy-Lang left the central bank first just before 2100 Paris time, after a meeting lasting about two-and-a-half hours.

BNP chief Michel Pebereau left soon afterwards. All three declined to comment.

Foreign rivals

Both Societe Generale and Paribas have rejected BNP's hostile proposal for a merger of three.

French banking analysts believe that the Paris authorities would rather like to see an agreed three-way merger, than risk a bidding war which could leave one of the players open to a foreign predator.

The French banking sector is in urgent need of consolidation to survive the market forces of the eurozone, and several foreign banks have already begun to eye up French institutions with a view to buy them.

Just before the meeting, Societe Generale's Daniel Bouton had repeated his view that BNP's proposal had "serious weaknesses, in itself limits the creation of shareholder value".

His bank and Paribas will meet on Thursday to discuss the intervention of the Bank of France.

During trading on Wednesday, Societe Generale shares jumped 4.17% to 169.9 euros, Paribas rose 0.66% to 106.7 euros and BNP closed 1.07% higher at 80.00 euros.