Société Générale

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Société Générale S.A.
Société Générale logo
Type Public (Euronext: GLE)
Founded May 4, 1864
Headquarters 29, Boulevard Haussmann 75009 Paris, France
Key people Daniel Bouton, Chairman & CEO
Philippe Citerne, CEO
Industry Finance and Insurance
Products Financial Services
Net income 5.22 billion EUR (2006)
Employees 120,000 (2007)
Slogan "Red, Black and Rising"
Website www.socgen.com

Société Générale (Euronext: GLE) is one of the main European financial services company with extensive activities in others parts of the world too. It is headquartered in France with the main head office in Tours Société Générale in the business district of La Défense west of Paris. The two main divisions are retail banking (particulaly in France and Eastern Europe) and investment banking (Derivatives, Structured Finance and Euro Capital Markets). As a French bank Société Générale is one of the oldest in the country.

The original name of Société Générale was Société Générale pour favoriser le développement du commerce et de l'industrie en France (English: General Company for the Support of the Development of Commerce and Industry in France). Société Générale is often nicknamed SocGen in the international financial world.

Contents

[edit] History

[edit] 1864 - 1893

The bank was founded by a group of industrialists and financiers during the second empire, on May 4, 1864, to support the development of commerce and industry in France. The bank's first chairman was the prominent industrialist Eugène Schneider (1805-1875) followed by Edward Blount, a Scotsman.

The company started to hire employees and establish offices. Coverage of France went ahead at a steady rate. By 1870, the bank had 15 branches in Paris and 32 in the French provinces. It set up a permanent office in London in 1871. At the beginning, the bank used its own resources almost entirely for both financial and banking operations. In 1871, Société Générale moved into the public French issues market with a national debenture loan launched to cover the war indemnity stipulated in the Treaty of Frankfurt.

From 1871 to 1893, France went through a period of economic gloom marked by the failure of several banking establishments. The company continued to grow at a more moderate pace, in 1889 there were 148 banking outlets, demonstrating the group's capacity to withstand unfavourable economic conditions.

[edit] 1894 - 1930

Starting in 1894, the bank set up the structures characterising a large, modern credit institution. As well as collecting company and private deposits, its branches started to provide short-term operating credits for industrialists and traders. It also moved into placing shares with the general public, issuing private debenture loans in France and also in Russia. Acquisition of equity stakes became a more secondary activity. The company's excellent financial health allowed it to expand its shareholding structure. In 1895, Société Générale had 14,000 shareholders, in 1913 they numbered 122,000. The war years were difficult and had serious consequences with the loss of Russian business. However, during the 1920s Société Générale became France's leading bank: its network had grown sharply since the 1890s, with a huge number of branches and seasonal offices allowing in-depth penetration of the provincial market (260 seasonal offices in 1910 and 864 in 1930). The number of sales outlets rose from 1,005 in 1913 to 1,457 in 1933 (including those operated by Sogenal). Thanks also to the dynamism of supervisory and management staff at head office and in the branch offices it moved ahead of Crédit Lyonnais (in terms of deposits collected and loans distributed) between 1921 and 1928. To satisfy the requirements of investing companies Société Générale created a subsidiary, Calif (company), specialised in medium-term credit in 1928.

[edit] 1931 - 1945

The 1930s were another difficult period. Given the decline in international and French business, the bank was forced to rationalise its network by closing down local branches. On the eve of the Second World War, the number of sales outlets was not much greater than in 1922. However, Société Générale was active in placing numerous public loans launched during this period by the State or the colonies. The war and the German Occupation interrupted its advance, but the bank moved into Africa and America.

[edit] 1945 - 1964

Société Générale was nationalised in 1945. It now had a single shareholder: the State. The period from 1945 to 1958 was characterised in France by rapid economic recovery but also a greater disequilibrium in the balance of payments, calling for continued exchange controls and virtually permanent credit control measures. It was not until 1959 that the economy really recovered, but credit controls were reinforced due to persistent inflationary pressures. Sharp growth in production and foreign trade opened up new areas of business for the banks. The industry underwent some quite radical changes, one of the most striking of which was much greater specialisation of credit. The range of banking services on offer expanded uninterruptedly. Thanks to its presence in New York, Société Générale was able to take advantage of the flow of business generated by the Marshall Plan. Société Générale continued to expand in France and elsewhere. It moved into Italy and Mexico and altered the status of its establishments in Africa after decolonisation, in accordance with the laws passed by these newly independent countries.

[edit] 1965 - 1990

Société Générale gave new impetus to its French network, with an acceleration in growth after 1966 following elimination of prior authorisation for opening branch offices. International expansion was just as vigorous. It was no longer limited, as before, to the main financial centres (London, New York), neighbouring countries (Belgium, Spain) and the former colonies, with the primary aim of facilitating the business of French firms, but was also aimed at guaranteeing the bank's presence where new markets were developing, either to export the technical expertise it had acquired in certain fields, or to keep up its contact with the multi-nationals. 1966 and 1967 represented a fundamental turning point in banking regulations, the main development being attenuation of the distinction between deposit and investment banking, and creation of the home mortgage market. Société Générale took advantage of this and acquired leading positions in some new financing techniques designed primarily for companies, such as finance leasing, setting up specialised credit subsidiaries for this purpose. The 1970s were characterised by two major developments: expansion of the international network and across-the-board introduction of IT facilities to cope with extension of the customer base and the development of deposit money. In 1971, the appearance of automatic cash machines crowned the success and development of the credit card. From the beginning of the 1980s, against a backdrop of deregulation and technological change, internationalisation of the markets and the emergence of new financial instruments, Société Générale set itself two commercial objectives. It focused increasingly on private customers via its network of branches and by acquiring specialised subsidiaries. It pursued and expanded its activities in the capital markets in France, and then, on a selective basis, in the different international financial centres. On 29 July 1987, Société Générale was privatised. It had been chosen from among the three leading French commercial banks nationalised in 1945 for its excellent risk-coverage, equity and productivity ratios.

[edit] Since 1991

In recent years, the Société Générale Group has focused on developing its activities around three core businesses through a combination of organic growth and acquisitions.

Retail Banking was strengthened in 1997 through the acquisition of Crédit du Nord, highlighting the Group's determination to capitalise on the restructuring of the French banking system. At the same time, Société Générale has looked to secure the long-term loyalty of its customers (launch of "one account number for life" and introduction of Jazz, a package of service offers). In 1999 it engaged in hostile takeover negotiations for the bank Paribas, but was outflanked by a competitor, the Banque Nationale de Paris (BNP).

In 1998, Société Générale set up Retail Banking outside France as a separate division, underscoring the Group's resolve to make this business one of its strategic development axes. This activity was also strengthened in 1999 through the acquisitions made in Romania (BRD - Groupe Société Générale), Bulgaria (Société Générale Expressbank) and Madagascar. This external growth strategy has been manifested through acquisitions in Central Europe (Komercni Banka in the Czech Republic and SKB Banka in Slovenia) in 2001. Africa is also a major area of interest for the bank, with the 2002 purchase of Eqdom in Morocco (the market leader in consumer lending) and Union International de Banque in Tunisia. In addition, 51% of SSB Bank in Ghana in 2003 and 50% of Geniki Bank in Greece in 2004 were acquired . In terms of specialized financial services, a department created in mid-2001, the purchase of two Deutsche Bank subsidiaries, ALD Automotive for multi-brand auto leasing and financing and GEFA for corporate sales financing enabled Société Générale to increase its European presence in these sectors. In 2002, it continued to pursue its external growth strategy by purchasing Hertz Lease, a European subsidiary specializing in long-term leasing and fleet management for Ford Motor Company vehicles.

With a track record as leader in France for financial savings products (mutual funds, investment funds, company savings plans), the Group has developed its Asset Management and Private Banking activities: in 1999, its subsidiary, Société Générale Asset Management, pursued the strategy of developing both its mutual fund management business in France and its activities aimed at major institutional investors at an international level. With the launch of Société Générale AM UK in London and the acquisition of Yamaichi in Japan, Société Générale Asset Management has taken a decisive step in establishing its international presence and is now able to offer its customers truly global fund management capabilities. Société Générale also has a worldwide presence in private banking activities. After pursuing a deliberate policy of acquisitions in 1998, Société Générale Private Banking consolidated and developed its franchise in 1999 against a backdrop of tougher competition.

During the 1st quarter 2004, the third branch of activity of the Société Générale Group, GIMS Global Investment Management and Services was created. In February 2004, Société Générale set up a new division named SG GSSI, Global Securities Services for Investors, which provides full investor services on securities and listed derivatives covered by the group around the world. SG GSSI is attached to the GIMS which regroups SG Asset Management, SG Private Banking and SG Global Securities Services for Investors. GIMS employs 7,600 people.

Société Générale is developing its Corporate and Investment Banking businesses under the SG CIB brand name, which was introduced by the Group in 1998. Bolstered by a sound client base and a recognised capacity for innovation borne out by the league tables (the Group is ranked among the global leaders in equity derivatives, convertible bonds, export finance, etc.), Société Générale is looking to develop its M&A, advisory and IPO activities through the acquisition of specialised firms (Hambros in the United Kingdom, Barr Devlin in the United States).

French reporter Denis Robert and former #3 of Cedel Ernest Backes, have accused Société Générale of having non-published accounts in Clearstream, which is at the center of a financial scandal. The bank denied those accusations.

[edit] Activity

Societe Generale twin towers in La Défense
Societe Generale twin towers in La Défense

Société Générale is the 3rd largest Corporate and Investment bank in the Eurozone by net banking income. 6th largest French company by market capitalisation. It employs 120,000 people, of which 75,000 in Europe, and maintains a presence in 80 countries. The bank is active in the finance, investment and asset management markets.

In France, Société Générale is active in retail banking with more than 2,700 branches (including its Crédit du Nord banking division).

SGCIB Société Générale Corporate and Investment Banking, the Corporate and Investment Banking arm of the Société Générale Group, is the 3rd largest corporate and investment bank in the euro zone by net banking income. Société Générale Corporate and Investment Banking serves corporates, financial institutions and investors in over 45 countries across Europe, the Americas and Asia. Combining innovation and quality of execution, it provides value-added integrated financial solutions and is a reference bank in its three specialist areas: Euro Capital Markets, Derivatives and Structured Finance.

[edit] Leadership

Since 1997, Chairman and Chief Executive Officer of Société Générale is Mr. Daniel Bouton, a former cabinet director under Alain Juppé.

[edit] Affiliates

Affiliates of SG include:

[edit] See also

[edit] External links


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