SocGen's CEO Krupa tightens screws on costs as bank's turnaround plan falls flat
Removes reference to hedge fund in paragraph 20
SocGen's shares lag despite CEO Krupa's strategy
Analysts question SocGen's NII inflection point
Takeover speculation dismissed over low-margin French retail
By Mathieu Rosemain
PARIS, Sept 20 (Reuters) -Societe Generale's SOGN.PA CEO Slawomir Krupa is set to turn the screws further on costs as he presses ahead with a turnaround strategy announced a year ago that has so far failed to revive the French bank's flagging share price.
SocGen is one of Europe's cheapest listed banks, trading at less than 30% its book value despite plans to cut costs of 1.7 billion euros ($1.90 billion) by 2026 and more than 2.7 billion euros in asset sales
The sales include a stake in its business in Guinea, announced on Friday, as well as the sale of its professional equipment financing business in April which brought in $1.2 billion.
Now the bank is tightening budgets in all divisions and mid-tier managers are encouraged to go further than just meet their cost targets, a source familiar with the matter said.
Business travel is capped and the range of IT services has been cut, among other measures, the same source said, speaking on condition of anonymity because they are not authorised to speak publicly.
SocGen declined to comment for this story.
Romain Burnand, chairman of Moneta Asset Management, which has a 0.46% stake in the bank based on LSEG data, said the cost-cutting measures are starting to translate into results and he is betting on an improved performance in the third quarter.
"There were some real disappointments with the (last quarterly) results. But it's a valuation that we think is very depreciated and the bank has strengths," said Burnand, whose SocGen holding is around 4% of its 1.8 billion-euro main fund.
The CEO has opted to bolster the bank's capital reserves rather than aiming for quick returns or transformative asset sales. The Guinea deal will have a positive impact of around 2 basis points on the bank's common equity tier 1 ratio, a key measure of financial strength.
Krupa dashed investor hopes of higher returns when he postponed a key profitability target by a year, aiming for a return on tangible equity between 9% and 10% in 2026, while limiting the payout ratio to 40%-50%.
“I wouldn't say they are not on track on the targets, but we can only know they’ll get there when we start to see the proper inflection in earnings, especially in the French retail banking business. And so far, it hasn't happened," said Flora Bocahut, an analyst at Barclays.
"It's not a question of ambition," said Olivier Casse, head of core European equity strategies at Sycomore AM, which holds a 0.4% stake in SocGen, according to LSEG data. "The new CEO wanted to tackle the issue of capital."
That means lower share buybacks and dividends, which is weighing on the share price. SocGen shares closed at 22.9 euros on Thursday, down from around 26 euros in September last year just before the strategic review was announced.
FRENCH RETAIL
Another concern is SocGen's retail business in France, where the bank cut a key target in August, which overshadowed the bank's second-quarter earnings and weighed on its shares.
French banks, including SocGen, have not benefited as much from the rise in interest rates because of the high cost of deposits in France. SocGen also suffered because of a miscalculated interest rate hedging policy.
The bank's net interest income (NII), or the difference between what a bank earns on loans and pays out for deposits, was hit, prompting it to cut its previously set target.
Casse said: "They weren't able to reassure us about the trajectory ... in the second half of the year, and in 2025 regarding this interest margin."
Sebastiano Pirro, chief investment officer at Algebris Investments, referring to the CEO's plans, said: "The execution has been fair, it is the communication that has been poor." Algebris doesn't currently have a stake in SocGen, according to LSEG data.
SocGen's problems, he said, were weak profitability and too little capital to cut costs dramatically.
TAKEOVER SPECULATION
UniCredit's CRDI.MI swoop to take a stake in Commerzbank CBKG.DE has boosted bank stocks and analysts have speculated that SocGen could become an M&A target.
Two investment bankers who cover the European finance sector dismissed that idea, saying SocGen's exposure to France's low-margin retail market did not make it attractive.
The bankers said a takeover by bigger rivals BNP Paribas BNPP.PA or Credit Agricole CAGR.PA would create antitrust concerns and scrutiny from French authorities over jobs, among other hurdles.
($1 = 0.8959 euros)
Societe Generale's valuation has lagged rivals for years https://reut.rs/3Tzj3D5
Reporting by Mathieu Rosemain in Paris;
Additional reporting by Tommy Reggiori Wilkes and Sinead Cruise in London. Editing by Anousha Sakoui and Jane Merriman
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නවතම පුවත්
වියාචනය: XM Group සමාගම් ක්රියාත්මක කිරීම පමණක් වන සේවා සපයන අතර වෙබ් අඩවියේ හෝ වෙබ් අඩවිය හරහා ලබා ගත හැකි අන්තර්ගතය බැලීමට සහ/හෝ භාවිත කිරීමට පුද්ගලයෙකුට ඉඩ සලසමින් අපගේ මාර්ගගත වෙළඳ පහසුකම වෙත ප්රවේශය ලබා දෙන අතර වෙනස් කිරීමට හෝ පුළුල් කිරීමට අදහස් නොකරයි. එවැනි ප්රවේශය සහ භාවිතය සෑම විටම (i) නියමයන් සහ කොන්දේසි, (ii) අවදානම් අනතුරු ඇඟවීම් සහ (iii) සම්පූර්ණ වියාචනයට යටත් වේ. එබැවින් එවැනි අන්තර්ගතයක් සාමාන්ය තොරතුරුවලට වඩා වැඩි යමක් සපයා නොමැත. විශේෂයෙන්ම, අපගේ මාර්ගගත වෙළඳ පහසුකමේ අන්තර්ගතය පෙළඹවීමක් හෝ මූල්ය වෙළඳපොළවල කිසිදු ගනුදෙනුවක් සිදු කිරීමට ඉදිරිපත් කිරීමක් නොවන බව කරුණාවෙන් සලකන්න. ඕනෑම මූල්ය වෙළඳපොළක වෙළඳාම් කිරීම ඔබේ ප්රාග්ධනයට සැලකිය යුතු අවදානමක් එක් කරයි.
අපගේ මාර්ගගත වෙළඳ පහසුකමේ ප්රකාශිත සියලු කරුණු අධ්යාපනික/තොරතුරුමය අරමුණු සඳහා පමණක් අදහස් කෙරෙන අතර මූල්ය, ආයෝජන බදු හෝ වෙළඳ උපදෙස් සහ නිර්දේශයන්; හෝ අපගේ වෙළඳ මිල පිළිබඳ වාර්තාවක්; හෝ ඕනෑම මූල්ය උපකරණයක ඉදිරිපත් කිරීමක් හෝ ඒ සඳහා පෙළඹවීමක්; හෝ විශේෂ ඉල්ලීමකින් තොරව ඔබ වෙත ලබා දෙන ලද මූල්ය ප්රවර්ධනයන් ලෙස නොසැලකිය යුතුය.
ඕනෑම තෙවන පාර්ශවීය අන්තර්ගතයක් මෙන්ම XM විසින් සකසන ලද අන්තර්ගතය එනම් අදහස්, පුවත්, පර්යේෂණ, විශ්ලේෂණ, මිල ගණන් සහ වෙනත් තොරතුරු හෝ මෙම වෙබ් අඩවියේ අන්තර්ගත තෙවන පාර්ශවීය වෙබ් අඩවි සඳහා සබැඳි සාමාන්ය වෙළඳපොළ විවරණයක් ලෙස "පවතින පරිදි" සපයා ඇති අතර එහි ආයෝජන උපදෙස් ඇතුළත් නොවේ. ඕනෑම අන්තර්ගතයක් ආයෝජන පර්යේෂණයක් ලෙස අර්ථ දක්වා ඇති ප්රමාණයට, ආයෝජන පර්යේෂණයේ ස්වාධීනත්වය ප්රවර්ධනය කිරීමට නිර්මාණය කර ඇති නෛතික අවශ්යතාවලට අනුකූලව අන්තර්ගතය සකසා නොමැති බවත් එලෙස අරමුණු කර නොමැති බවත් ඔබ සලකා පිළිගත යුතු අතර එබැවින් එය අදාළ නීති සහ රෙගුලාසි යටතේ අලෙවිකරණ සන්නිවේදනයක් ලෙස සලකනු ලැබේ. ඉහත සඳහන් තොරතුරු සලකා මෙතනින් ප්රවේශ විය හැකි, ස්වාධීන නොවන ආයෝජන පර්යේෂණ සහ අවදානම් අනතුරු ඇඟවීම පිළිබඳ අපගේ දැනුම්දීම ඔබ කියවා තේරුම් ගෙන ඇති බව සහතික කර ගන්න.
