Didier Valet, SocGen’s new head of corporate and investment banking, has been laying out his wares. In a message on the bank’s website, he explains what it is that SocGen CIB is all about now.
“SG CIB will pursue its strategy in 2012 by capitalising on the business lines where we already have expertise, teams and clients, particularly equity derivatives and commodities,” says Didier. “In the Americas and Asia-Pacific regions, SG CIB will concentrate its efforts on its global franchises… some segments will be restructured to develop an advisory offering.”
Analysts say this is a little curious in light of the fact that while SocGen is clearly a market leader in equity derivatives, its market share in commodities is approximately 1%. “He doesn’t seem to know what he’s talking about,” says one French banking analyst in London: “From what I’ve seen, the strategy is very confused.”
At the same time, SG CIB’s focus on its ‘global franchise’ in the US is said to follow a programme of dramatic staff cuts in New York, where up to 50% of people are rumoured to have been let go.
Unnamed SocGen bankers recently confessed to L’Agefi that the bank’s big M&A build up in 2010 and 2011 hadn’t been, “optimal,” and that the bank’s now planning to focus its M&A efforts on a few big sectors (energy and natural resources, FIG, retail, and media and telecoms).
Separately, in a presentation yesterday, SocGen’s overall CEO Frederic Oudea, said the bank is going for a more ‘resource light’, ‘integrated,’ and ‘distribution oriented’ model. SocGen CIB’s 2011 revenues were comparable to 2007, but with 26% less risk.
SocGen currently distributes one third of its loans, but wants to distribute more, said Oudea. In future, it will focus on: natural resources financing [this perhaps being what Valet meant by his reference to commodities], equity derivatives, cross asset structured products, Europe and its European client base and project finance. Cuts will be made in IT as SocGen ‘pools’ systems.
No mention was made of M&A, or of the US, or Asia. “Everyone wants to redistribute loans now,” said the analyst. “But there’s still a question as to who will buy them.”
SocGen is making 13% of its staff redundant, with 880 of them going in France. As we noted last week, this is causing despair and desperation among French bankers who can’t find alternative employment.
The only consolation is that SocGen is offering a minimum of €30k in redundancy payments to its French investment bankers in an effort to encourage them to leave of their own accord.
BNP Paribas is also making job cuts – 1,400 to be precise. It said yesterday that it was 60% of the way through this in March. Unlike SocGen, BNP’s cuts are falling disproportionately outside France, are are not voluntary, and don’t appear to come with such generous inducements to go.