WHEN: TODAY, WEDNESDAY, AUGUST 10TH
WHERE: CNBC'S "CLOSING BELL"
Following is the unofficial transcript of a CNBC EXCLUSIVE interivew with Societe Generale CEO Frederic Oudea today on CNBC's "Closing Bell." All references must be sourced to CNBC.
SocGen CEO Speaks Out: http://video.cnbc.com/gallery/?video=3000038540
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GRIFFETH: THIS MAY HAVE BEEN THE STORY OF THE DAY. THERE WAS SPECULATION ABOUT FRANCE'S CREDIT WORTHINESS AND THAT SENT SHARES OF MANY OF THEIR BANKS, ESPECIALLY SOCIETE GENERALE LOWER, DOWN THE MOST ITS SEEN IN 2 1/2 YEARS. FRANCE'S SECOND LARGEST BANK HAS DENIED ALL MARKET RUMORS ON FRANCE'S CREDIT WORTHINESS.
BARTIROMO: THEY HAVE IN FACT. WE'RE JOINED OVER THE PHONE BY THE MAN IN CHARGE, SOCGEN CEO FREDERIC OUDEA THANKS FOR JOINING US. LET ME ASK YOU FIRST ABOUT THE BANK'S EXPOSURE TO THE SOVEREIGN DEBT OF EUROPE, PARTICULARLY FROM TROUBLED AREAS LIKE SPAIN, PORTUGAL AND ITALY.
OUDEA: GOOD AFTERNOON. THANKS FOR INVITING ME. WE HAVE VERY LIMITED EXPOSURE TO SPAIN AND ITALY. WE DON'T HAVE ANY RETAIL ACTIVITY. SO WE DON'T HAVE THAT DEPENDING ON THAT. AND THE EXPOSURE WE HAVE IS PREDOMINANTLY LINKED TO OUR PRIMARY BUSINESS, ITS A LIMITED AMOUNT. REGARDING GREECE, WE HAD 1.8 BILLION AT THE END OF JUNE. WE DISCOUNTED THAT BY 21%. ALL THESE FIGURES SHOW IT'S PRETTY SMALL COMPARED BOTH WITH THE BALANCE SHEET TECHNICAL BASE AND, OF COURSE ITS PROFIT.
GRIFFETH: SIR, PART OF THE RUMOR TODAY IS WHAT WOULD HAPPEN TO THE FRENCH BANKS IF FRANCE WERE TO LOSE ITS AAA CREDIT RATING AND THAT BROUGH PRESIDENT SARKOZY BACK FROM HOLIDAY HE WENT TO PARIS TO MEET WITH HIS FINANCIAL TEAM AS YOU KNOW. THAT MAY HAVE COST SOME OF THE SELL OFF FOR YOUR AND OTHER BANK SHARES TODAY WHAT WOULD HAPPEN TO YOUR BANK IF FRANCE LOST ITS AAA RATING? WOULD YOU HAVE TO RAISE NEW CAPITAL?
OUDEA: CAN WE SPEAK JUST A LITTLE BIT ON FRANCE. I MUST SAY, I AM A BIT SURPRISED BY THE RUMORS AROUND FRANCE WHERE THE THREE RATING AGENCIES JUST RECENTLY CONFIRMED THE AAA RATING. WE HAVE AN ECONOMY THAT IS A BALANCED ONE WITH OUR GOVERNMENT WHICH ABSOLUTELY DETERMINED TO REDUCES THE PUBLIC DEFICITS AND THE PUBLIC DEBT AND RATIOS WHICH IS NOT THAT HIGH. THESE RUMORS ARE VERY STRANGE. EVEN IF IT WERE HAPPENING, AT THE END OF THE DAY, LIKE IN THE U.S., WE WOULD KEEP A VERY VERY STRONG RATING, SO IT IS SOMETHING WHICH IS NOT FOR THE NEXT TWO YEARS AND THE COMMENT OF S&P WAS AROUND THIS KIND OF SITUATION. REALLY, IT'S VERY SURPRISING TO SEE RUMORS LIKE THIS WHICH ARE UNFOUNDED. LET ME JUST MENTION THAT ALL WE SEE ON THE FRENCH ECONOMY IS AGAIN AS I MENTION IS SOMETHING BALANCED. WHICH MEANS FRENCH RETAIL ACTIVITIES ARE VERY STRONG. WE HAVE NOT PEOPLE WHO HAVE BEEN OVERLEVERAGED, DON'T HAVE A CRISIS ON MORTGAGE AND WE HAVE SOMETHING WHICH IS VERY STEADY THERE AND COST OF LIVING LOW AND DECREASING. I THINK THE SITUATION IS REALLY REALLY UNDER CONTROL IN FRANCE AND IN GOOD HANDS.
BARTIROMO: ARE YOU FEELING THERE IS A RUN ON YOUR BANK IS IT SHORT SELLERS? CLEARLY THE MARKET IS DISAGREEING WITH YOU. YOUR STOCK WAS DOWN 15% TODAY AND THERE ARE RUMORS SURROUNDING SOCGEN AND A NUMBER OF FRENCH BANKS. ARE YOU FEELING THIS IS A RUN ON YOUR BANK?
OUDEA: WE HAVE SEEN RUMORS AND THE IMPACTS ON ALL FRENCH BANKS, TWO DAYS AGO IT WAS ON UK BANKS OR ITALIAN BANKS. TODAY WAS CLEARLY RELATED TO FRANCE AND THERE WERE SOME PARTICULAR RUMORS. ALL THAT IS ABSOLUTELY UNFOUNDED. I CAN DEFINITELY DENY ALL THESE RUMORS. IN SUCH A MARKET WHICH IS NERVOUS. IT IS RELATIVELY EASY TO SPECULATE ABSOLUTELY UNFOUNDED INFORMATION. SOCIETE GENERALE POSTED VERY GOOD RESULTS THE END OF JUNE DESPITE THE GREEK IMPACT. SOCGEN INCREASED ITS QUARTER ONE RATIO AT 9.3%. WE HAVE A VERY GOOD FRENCH RETAIL. WE HAVE RETAIL OUTSIDE FRANCE WHICH IS NOT IN THE EUROZONE. WE HAVE COUNTRIES WHICH HAVE NO BIG DEBTS. AND I FEEL OUR BUSINESS IS WELL MANAGED AND HAVE IN THE LAST TWO YEARS, VERY STEADY CONTRIBUTION. ALL THAT IS ABSOLUTELY RUBBISH AND RIDICULOUS AND WE HAVE ACTUALLY THE FRENCH REGULATORY AUTHORITY TO LAUNCH AN INQUIRY ON THIS. IT'S PART OF THIS MARKET WHICH TODAY HAS LOST RATIONALE.
GRIFFETH: LET ME ASK YOU ABOUT ONE OF THE SPECIFIC RUMORS, ONE OF YOUR LARGEST SHAREHOLDERS, GRUPANA THEY HOLD 4% OF YOUR SHARES, MAY NEED TO RAISE CASH AND THAT MAY HAVE BEEN PART OF THE REASON FOR THE SELLING TODAY AS THEY WERE RAISING THE CASH HAVE YOU HEARD ANYTHING LIKE THAT
OUDEA: I WILL NOT COMMENT ON OUR SHAREHOLDER. I THINK IT'S ALL PART OF THESE STUPID AND UNFOUNDED RUMORS.
BARTIROMO: LET ME ASK YOU THIS. BECAUSE OF COURSE WE'RE ALL TALKING ABOUT THE NEW REGULATORY ENVIRONMENT AND WE KNOW BASEL 3 REGULATION WILL REQUIRE THAT BANKS HOLD HIGHER CAPITAL LEVELS THAN CURRENT MONEY IN RESERVE. ARE YOU SAYING NOW RIGHT NOW THE BANK IS PREPARED TO MEET BASEL REQUIREMENTS EVEN IF IT IS HOLDING 10% TIER ONE CAPITAL. CAN YOU SAY TODAY YOU WILL BE MEETING THE STANDARDS OF BASEL 3 AND WILL NOT NEED TO RAISE NEW CAPITAL?
OUDEA: YEAH ABSOLUTELY. WE SAID CLEARLY AT THE END OF 2013, WHICH MEANS MUCH AHEAD OF THE TIME FRAME SET BY THE REGULATOR, WE WILL HAVE THE CORE TIER ONE OF 9%, WHICH INCLUDES THE REGULATION ALSO ON THE GLOBAL SYSTEM OF FINANCIAL INSTITUTIONS. IN PRACTICE, WHAT DOES THAT MEAN? IN PRACTIVE THAT MEANS WE WILL DOUBLE BETWEEN THE END OF JUNE 2007 AND END OF 2013, WE WILL DOUBLE OUR CAPITAL FOR THE SAME AMOUNT OF RISK. WE HAVE ALREADY INCREASED SIGNIFICANTLY CORE TIER ONE BEFORE THE CRISIS IN 2007, JUNE OF 2007, WAS 6.7%. WE STAND NOW AT 9.3. WE HAVE A BALANCE SHEET MUCH BETTER BECAUSE WE PUT THROUGH PNL PROVISIONS FOR SUCH CREDIT. WE SEE AN IMPROVEMENT OF THE CREDIT COST EVERYWHERE FOR ALL OUR BUSINESSES AND THINK RETAINING EARNINGS WE WILL MEET WITH THESE REQUIREMENTS AND SEE NO ISSUE WITH THAT FULL BASEL 3 WITHIN JUST TWO YEARS.
GRIFFETH: LET ME ASK YOU TO REVISIT THE CREDIT RATING QUESTION. AFTER THE U.S. CREDIT RATING WAS LOWERED FRIDAY, THERE WERE THOSE WHO POINTED TO FRANCE AND SAID IF THE U.S. CREDIT RATING GOES DOWN, MOST SURELY, FRANCE'S MUST GO DOWN. ARE YOU SAYING IN YOUR DEFENSE OF THE FRENCH DEBT SITUATION, THAT FRANCE DESERVES A HIGHER CREDIT RATING THAN THE UNITED STATES RIGHT NOW?
OUDEA: I FIND IT A BIT SURPRISING. BECAUSE ONE COUNTRY IS DOWNGRADED BY ONE NOTCH AT THE END OF THE DAY OTHERS SHOULD FOLLOW . I MEAN IT'S A STRANGER WAY TO THINK ABOUT THE SITUATION AND THE ECONOMY. WHAT I'M JUST SAYING IS WHAT I READ FROM THE COMMUNICATION OF CREDIT RATING AGENCIES. FRANCE IS A AAA WITH A STABLE PERSPECTIVE. SO IF THE GOVERNMENT IS CARRYING OUT OUR ISSUES AND PUBLIC FINANCE AND DEFINITELY THE CASE, I DON'T SEE WHY TO CHANGE. AND I'M SORRY IT MIGHT BE DIFFERENT FROM ANOTHER COUNTRY, I FIND IT'S A STRANGE WAY TO THINK ABOUT THE WORLD.
BARTIROMO: LET ME ASK YOU WHERE DOES THE GROWTH COME FROM AT SOCGEN IN THE COMING YEAR OR TWO? IS IT LENDING OR TRADING? ARE YOU SEEING ANY CHANGE IN TERMS OF THE DEMAND SIDE OF THE PICTURE RIGHT NOW, GIVEN WHAT'S GOING ON IN EUROPE.
OUDEA: WHAT WE SAID LAST WEEK CLEARLY THE ENVIRONMENT FOR THE NEXT 12-18 MONTHS WOULD BE MORE SUBDUED. WE SEE LESS GROWTH IN THE U.S. CLEARLY THAN EXPECTED AND EUROPE AND WE KNOW BOTH WILL BE MODERATED AROUND 2%. NO. NO. LET ME JUST -- IF I CAN CARRY ON, FIRST OF ALL, FRANCE, A MAJOR MARKET IS GROWING AND HAS A GOOD DEMOGRAPHIC. FOR RETAIL BANKING BUSINESSES HAVING AN INCREASED NUMBER OF CLIENTS, WE WILL GROW AT SOMETHING LIKE 2% IN FRANCE IN GDP AND SO WE HAVE KEPT ACTIVITY TO GROW OUR BUSINESS AND ALSO BY SAVING COSTS. THEN WE HAVE INTERNATIONAL RETAIL ACTIVITIES IN COUNTRIES WHICH ARE IN BETTER SHAPE FROM THE PUBLIC POINT OF VIEW AND IN WHICH WE GROW. IN CENTRAL AND EATERN EUROPE, AFRICA, RUSSIA, RUSSIA GROWING AT 4%. THESE ARE TERRITORIES, WHERE THE BANKING PENETRATION IS NOT THAT HIGH. THEY WOULD BE MORE AND MORE SOPHISTICATION IN THE PRODUCTS THERE. SO WE EXPECT GROWTH THERE IT IS TRUE REVENUES MIGHT GROW MORE MODERATELY, BUT THEN YOU HAVE THE CAPABILITY TO MAINTAIN YOUR COSTS AND MAKE EVEN FURTHER PRODUCTIVITY GAINS. IT CAN BE PROVIDED IF THE REVENUE GENERATION PRECISELY TO BUILD THE CAPITAL BUFFER. I'M REALLY POSITIVE FOR THIS. WE SAID THAT DURING OUR RESULTS LAST WEEK. OUR PROFITS AND RESULTS WILL BE SOLID AND WELL IMPROVE THAT PROGRESSIVELY AND IMPROVE THAT. AND AGAIN BE IN LINE TO MEET THE BASEL 3 REQUIREMENTS AHEAD OF THE SCHEDULE.
BARTIROMO: THANK YOU FOR BEING ON THE PROGRAM.
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