SocGen CEO Warns French Candidates on Bank Breakups
Associate Editor, CNBC
The chief executive of Societe Generale, Frederic Oudea, warned Socialist party French presidential candidate Francois Hollande against any move to break up the French banking system on Thursday as the financial institution announced first quarter earnings that declined from a year earlier.
Oudea told CNBC the bank had delivered the same message to both Hollande and Nicloas Sarkozy during the election campaign, adding that the French banking system had outperformed its competitors in the rest of Europe.
“The message that we have been delivering to the different candidates in the elections is 'look at the results.' In the last three years, the French banking sector has delivered growth to the economy higher than other large country in Europe. We did better than any other large country in Europe, 5 percent versus 1.7 percent for the rest of the Euro zone as whole,” Oudea said.
“Secondly we have been able to show that we didn’t cost the taxpayer anything compared to other banking sectors . Third, we have been able to show that in a relatively mediocre environment that we have been able to meet the commitment of the new regulations. All of this should show our capacity to lend to the French economy and it should remain the next government’s priority that we continue to do that,” he added.
Societe Generale reported a 20.1 percent fall in net profit for the first quarter, hit by the cost of selling assets and other one-off charges as it sought to strengthen its balance sheet in a slowing economy.
France's second-biggest listed bank reported quarterly net income of 732 million euros ($963 million). Analysts had been forecasting 748.1 million, according to Reuters.
Revenue fell 4.7 percent to 6.3 billion euros. SocGen said it had sold 6.4 billion euros' worth of assets during the first quarter to cut debt, which pushed up its core European Banking Authority Tier 1 capital ratio—a key metric of banks' ability to withstand losses—to 9.4 percent.
But Oudea said he was happy with the bank’s performance in the first quarter. “I’m very happy with the beginning of the year. First of all, we have seen sound business performance across the group and I’m talking about in particular our investment banking business,” he told CNBC.
"Secondly, strong capital generation. Our core tier 1 and Basel 2.5 goes from 9 percent at the end of 2011, to 9.4 percent in just one quarter. And the third element, we give more information on Basel 3 and we confirm that we will be able to the 9 percent commitment at the end of 2013 thanks to our revenue generation and our deleveraging.”
Oudea said the disposal of assets would provide SocGen with an additional capital buffer which might be used to finance a selected group of its businesses.
The CEO suggested that 2012 would remain volatile and uncertain, with Europe still in the process of regaining confidence.
“We have en economic scenario of 0.5 percent economic growth in France, something slightly negative for Europe as a whole, and the beginning of the year certainly fits with the outlook that we have,” he added.