France-based Societe Generale has announced the sale of its private banking divisions in the UK and Switzerland to Union Bancaire Privée for EUR 900 million.
This decision is part of an ongoing strategy by the bank's CEO to divest less profitable segments of the bank. The transactions involve the sale of SG Kleinwort Hambros in the UK and Societe Generale Private Banking Suisse. Together, these divisions manage approximately EUR 25 billion in assets.
This move aligns with the bank's broader strategy to refocus and bolster its capital base following several restructuring efforts over the past 15 years. Since the CEO assumed his role last year, he has faced challenges in garnering market support for his strategy according to the Financial Times. On 5 August 2024, SocGen’s stock fell by 3% amid a broader market decline. Societe Generale's strategy, which emphasises more conservative revenue growth and stricter capital discipline, initially met with investor scepticism when it was introduced last September.
Recent financial results have been mixed. While the investment bank sector showed promise in the second quarter, SocGen's performance in the French retail banking segment fell short of expectations, leading to a reduction in its annual forecast and a further decline in share value.
Societe Generale's executives have been active in streamlining the bank, having already sold off SocGen’s equipment finance division, its Moroccan operations, and other assets in Africa. Additionally, Societe Generale has reached an agreement to transfer its Madagascar business, Societe Generale Madagasikara, to BRED Banque Populaire, though the terms of this deal were not disclosed.
The bank indicated that the sales of the UK and Swiss private banking units are expected to improve its CET1 ratio by approximately 10 basis points, with the transaction anticipated to be completed by the end of the first quarter of 2025. Societe Generale plans to continue developing its private banking operations through its remaining branches in France, Luxembourg, and Monaco.
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