(Addition of share price, information on M&A advice)
PARIS, May 10 (Reuters) – Societe Generale plans to reduce risk exposure in its business in global markets and focus more on financing and transaction advice as part of its bank overhaul. investment announced Monday.
The lender is looking to increase the division’s profitability and stabilize its revenue, after its flagship activity in equities, long a force, was hit hard in the COVID-19 pandemic last year when companies suspended or canceled dividends.
France’s third-largest listed bank said it would aim for more sustained and profitable growth in its corporate and investment banking activities with a rebalancing between market activities, its most profitable but riskiest franchise, and advice on financing and mergers and acquisitions.
SocGen is generally a second-tier player when it comes to advising on global mergers and capital raising. Last year, he ranked 19th in the world for his debt raising advice according to Refinitiv data, although he has a greater presence in areas such as green equity transactions and financing. of assets.
The bank’s shares rose 1.7% as the market opened before falling on the latest trade to 0.5%.
The French bank said it is aiming for a normative return on equity of more than 10% in its global banking and investor solutions business from 2023, up from 7% currently.
The lender also said it was targeting a cost base of between € 5.5 billion and € 5.7 billion ($ 6.93 billion) in 2023 in its global banking and investor solutions business, against around 5.8 billion euros in 2020, while it continues the savings announced previously.
SocGen CEO Frédéric Oudea has accelerated the global overhaul of companies underway since 2018, in one of his last chances to consolidate his legacy before his term expires in 2023.
The bank’s shares have risen 46% so far this year after falling near their 30-year low in 2020, boosted by a rebound in its market activity and forecasts of loan losses caused by the pandemic. will be lower than previous forecasts.
But SocGen’s market value is still less than half of what it was when Oudea took over in 2008 following huge losses on equity derivatives caused by dishonest trader Jerome Kerviel. ($ 1 = 0.8223 euros) (Report by Matthieu Protard and Sudip Kar-Gupta, Editing by Sarah White and Emelia Sithole-Matarise)