It may be the only proposed merger in history that looks like a spelling mistake. Last week's announcement of talks between France's Natexis and Ixis with the aim of creating Natixis, a joint investment banking and fund management venture, had many doing a double take at the wordplay. However, a deal involving 25% of the merged company floating on the stock exchange would have profound significance for French banking.

The news that Natexis' parent, Banque Populaire, and Caisse d'Epargne, parent of Ixis, had started exclusive merger negotiations took many by surprise, despite being whispered about for three years. In the big-profit world of investment banking, both significantly trail peers BNP Paribas and Société Générale.