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Summary
- Société Générale SA has announced that it will be merging two of its retail banking networks
- This will result in saving more than €450 million by 2025 in total
- The amalgamated retail unit will serve about 10 million customers
French multinational investment bank Société Générale SA, popularly known as SocGen, has announced that it will merge two of its retail banking networks -- Credit du Nord and Société Générale -- in a bid to strengthen its profitability. The global investment bank and financial services group is expecting to save nearly €450 million by 2025 with this move. Group CEO Frederic Oudea said the investment bank is making this move to bolster the multinational’s profitability.
The merger would see the total number of branches going down by 600 from the existing number of 2,100 by 2025. The merger of both the divisions will cost the banking group around €800 million. The new retail unit will be serving about 10 million customers. A bank spokesperson said that the merger will not see any job losses.
SocGen, which is France’s third largest listed lender, said that it is aiming to rope in around 4.5 million customers by 2025 for its online banking unit in Boursorama, which currently has a customer base of 2.5 million. The cost of acquiring new clients will lead to a loss of 230 million euros, but it is targeting to start making profits by 2024.
The shares of SocGen (EPA: GLE) witnessed a fall of as much as 1.8 per cent on December 7 at around 9:55 AM.
Pandemic crisis
The bank was hit hard by the coronavirus pandemic. Once considered as an investment powerhouse, the global banking and finance major’s capital market units went through a difficult year incurring the worst quarterly losses in the past 12 years.
The setting aside of more capital due to the pandemic has resulted in a net loss of €1.26 billion or $1.48 billion for the second quarter of this financial year. In order to deal with prospective risks from the ongoing crisis, the French bank made provisions of €653 million for the period. During the first quarter, the bank saw losses worth €326 million.
The revenues of SocGen stood at €5.3 billion for Q2, experiencing a drop of almost 80 per cent from the previous year’s Q2 numbers, which stood at €6.3. billion. The expenses reduced from €4.3 billion euros in Q2 2019 to €3.9 billion euros in Q2. It’s tier 1 capital ratio rose to 12.5 per cent, which was 12 per cent in Q2 2019.
This year, the group’s stock has fallen by 41 per cent on a year-to-date basis, making it the third worst performer out of the 38 members listed on STOXX 600 banking index.
