It said the £41bn cash-and-shares offer amounted to an increase of 5% in its offer for SG and an increase in 12.4% for Paribas.

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

If BNP's bid is successful it will create the world's first trillion-dollar bank in asset terms.

The drawn out banking tussle began when Societe Generale launched a friendly takeover of Paribas on 1 February.

Banque Nationale de Paris (BNP) then made a hostile bid for both SG and Paribas.

The takeover battle was eagerly watched by foreign investors, who saw their shareholdings surge in value.

The government staged talks aimed at brokering a compromise in line with what it called the national interest, but discussions broke down.

Bidding war

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 three bank's total capitalisation fell by 6.5bn euros - 11% - after the government, in the form of the Bank of France, intervened.

The pricing of shares in the three banks on the Paris stock exchange was delayed until noon (1200 GMT) after Thursday's announcement.

Separately, the French stock exchange authorities on Thursday gave the green light to an improved offer that SG made for Paribas on June 14, at an earlier stage in the saga.

The country's banking authorities were also expected to approve the validity of the offer shortly.