LONDON/PARIS (Reuters) – Societe Generale is open to the idea of selling its subsidiary specializing in sales and capital goods financing while the group’s new chief executive, Slawomir Krupa, is tasked with relaunch the Red and Black Bank, sources close to the matter told Reuters on Thursday.
The bank considers this division, called SGEF, to be non-essential even though it has already sold part of its operations in 2020, said the sources, who spoke on condition of anonymity.
However, a sale of all or part of the activity may not take place immediately due to difficult market conditions, they specified.
Slawomir Krupa, who is due to unveil his strategic plan on Monday in London, seeks to convince shareholders that he is capable of improving returns without taking excessive risks in a difficult context for the banking sector.
The stock price of Société Générale relative to the value of the group’s tangible assets is 0.34, a ratio which places the French bank at the same level as its sister Deutsche Bank but far behind its great rival BNP Paribas, due to concerns regarding Société Générale’s exposure to more volatile investment banking revenues.
A spokesperson for Societe Generale declined to comment.
A sale of the securities businesses, grouped in the SGSS division, is also envisaged, according to information published in the press.
SGEF provides financing solutions, such as leasing or hire purchase, for manufacturers and distributors in sectors such as industrial equipment and transport.
The division managed assets of 24 billion euros at the end of December and employed 1,400 people, according to the sources interviewed.
Societe Generale is unlikely to commit to selling some of its businesses at its next investor day, and Slawomir Krupa may indicate plans to spin off some of the group’s non-core businesses over time, the sources said. .
Slawomir Krupa is instead expected to emphasize the group’s growth areas when presenting the strategic plan, said a person familiar with the bank’s intentions.
In his first comments to analysts as new CEO, Slawomir Krupa pledged last month to pursue “a rigorous policy on the business portfolio”, focused on “long-term value creation” .
These comments were widely seen as a sign of his desire to make potential sales of non-strategic assets.
Selling some assets would provide liquidity as the banking sector prepares for increased solvency requirements under Basel IV rules due to come into force in early 2025.
One of the key questions, analysts say, is whether Slawomir Krupa can improve the 10% return on tangible equity set for 2025. How the group’s new chief executive intends to manage costs will therefore be closely watched.
(Reporting Pablo Mayo Cerqueiro, Mathieu Rosemain and Andres Gonzalez, with the contribution of Amy-Jo Crowley; Camille Raynaud, edited by Blandine Hénault)
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