Credit Agricole has emerged as a second bidder for Société Générale, the French bank at the centre of a €5 billion (£3.7 billion) trading scandal.

It is understood to have hired Lazard, the investment bank, and Calyon, its own corporate and investment banking arm, to advise it on a possible bid.

Rival BNP Paribas, France's largest bank, said on Thursday that it was considering a bid for Société Générale.

BNP Paribas said yesterday: "We are studying it because all of Europe's banks are studying it."

Société Générale is France's second-largest lender.

Speculation is gathering pace that BNP Paribas will make a bid for its competitor as early as next week.

Under French rules, a bank must inform the Banque de France that it is intending to make a bid for another lender eight working days before going ahead with an offer. If BNP Paribas told France’s central bank it was intending to make an approach to Société Générale on the day the scandal broke, January 24, it could make a bid by next Tuesday, February 4 — eight working days later.

Christian Noyer, the Govenor of the Banque de France, was informed of the trading irregularities at Société Générale on January 20 — two days after Jérôme Kerviel's managers were told of the trader's activities that resulted in the €5 billion loss and several days after the practices were discovered.

Société Générale is being advised by JP Morgan and is also understood to have retained François Henrot, the managing partner of Rothschild in Paris.

BNP Paribas's usual advisors include Goldman Sachs, who are understood to be "very keen" to work for the bank on this deal, as well as Lehman Brothers and Lazard, although Lazard has already been retained by Credit Agricole.

Shares in Société Générale rose 3 per cent this morning to €86, valuing the entire group at €40 billion. Crédit Agricole is valued at €34.5 billion and BNP Paribas at €59.6 billion.

Earlier this week, Citigroup changed its recommendation on Société Générale's stock from a "buy" to a "sell", and, at the same time, cut its forecast on a takeover price by 50 per cent from €130 to €65 a share, reducing the price tag from €72.9 billion to €36.4 billion.

Takeover speculation has rescued Société Générale's shares from the €66.8 low the stock has hit since the crisis involving "rogue trader" turned national folk hero, Mr Kerviel, came to light.

Mr Kerviel, who is now being feted by some as a Robin Hood-type character, was released on police bail this week after admitting making the irregular trades on European stock market movements, but he contended that other traders also made large bets outside the parameters set by Société Générale.

He also said that the bank had been warned about his trading activity in November last year by Eurex, the derivatives exchange owned by Deutsche Borse, the German stock exchange, but he covered up the trades by producing false documents. A spokeswoman for the AMF, the French market regulator, confirmed that it is still investigating the affair.

The eight day rule governing the takeover of French banks was introduced in 1999 by Jean-Clause Trichet, who was then Governor of the Banque de France and is now president of the European Central Bank.

At the time, BNP was making its first attempt to acquire Société Générale as part of a three-way merger with Paribas.

Société Générale has also admitted it will pay its staff to stay at the scandal hit bank. The bank is set to announce its bonuses for 2007 this month but the bank is willing to make additional payments to retain staff and stop them being lured away to rival lenders.

Jean-Pierre Mustier, the head of the corporate and investment banking arm at Société Générale, confirmed the staff retention plan, adding: "I have no doubt that a certain number of competitors, as they do every year, will try to poach people."

Daniel Bouton, the chairman and chief executive at Société Générale, and its co-chief executive, Philippe Citerne, have both promised to forgo their bonuses for 2007 and will forfeit their salaries for the first half of this financial year.

Earlier this week, both executives secured the backing of Société Générale's board after political pressure for the bank to make changes at the top.

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