SocGen and Paribas said after board meetings that they considered the shock $37 billion share swap offer hostile and contrary to their shareholders' interests.

But they said they would not take formal legal positions until next week after the bid has gone through the regulatory approval process.

Shares in all three banks extended their gains on Friday after spectacular gains on Thursday. Societe Generale rose 3.27 per cent, Paribas 2.56 per cent and BNP 1.87 percent, all outperforming the blue chip CAC-40 index.Analysts had welcomed the three-way deal, saying it was more attractive than a SocGen/Paribas merger because it addressed overcapacity in the domestic retail banking, but now feared SocGen would mount a defence detrimental to shareholders.

"The BNP offer is a great deal, and I think it should go through, but I don't think (SocGenhead Daniel) Bouton will accept it. I fear it's war," Guillaume Tiberghien, banking analyst at Enskilda Securities in London, said.JP Morgan took a similar line, saying the BNP bid was more attractive than SG Paribas, but they were "concerned that SG may engineer a defence that is not in shareholders' best interest or that it could re-enter the SG/Paribas merger".

SocGen said on Friday it thought the parity used in BNP's exchange offer - 15 BNP shares for seven SocGen shares - undervalued its securities and added that a three-way group was "unmanageable", all the more so because the bid was hostile.

"They're trying to get more favourable terms for the offer while organising their defence," Tiberghien said. "For the time being all they can is to try and raise their share prices." Paribas has appointed Rothschild & Cie as its adviser and SocGen has taken on Morgan Stanley. BNP is being advised by Lazard Freres and Goldman Sachs.

Paribas said it opposed the hostile offer as BNP's proposal lacked"transparency", saying that, as it stood, the BNP plan would result in Paribas being broken up and sold off.

"When outlining its project, BNP showed it would probably sell a large part of Paribas," he said.

He said he expected BNP would only retain Paribas's asset management and retail credit activities.

Insurer Axa, which is on the boards of all three banks, declined to comment on market talk that the Paribas and SocGen remarks were approved by all board members, except Axa, which earlier said it backed BNP's offer."We do not comment on board meetings," an Axa spokesman said on Friday. "We think the first deal, SG Paribas, was a good deal for both companies. Then BNP offered another deal which we think is better."

French authorities have five working days to approve the BNP bid so, assuming it goes ahead, SocGen and Paribas will take a formal position next week.

Then BNP's offer would run for 25 working days, with another offer permissible during the first 20 days of that period.

However, in theinterim, the war of words looked set to escalate. BNP sent out JP Morgan's analysis straight after SocGen published its statements, underlining the comments supporting a three-way merger. Meanwhile, banking sources said NP's plan underestimated the number of jobs it might have to cut in the French retail banking network to hit its return on equity targets for 2002.