SocGen Seeks More Than $500 Million Savings in Retail Shift
(Bloomberg) -- Societe Generale SA expects to cut annual costs by about 450 million euros ($545 million) by combining its French retail operations with its Credit du Nord subsidiary, as Chief Executive Officer Frederic Oudea seeks to bolster profitability.
The number of branches in the merged division will fall by about 600 to 1,500 by 2025, the bank said in a statement on Monday. The integration will cost as much as 800 million euros, most of which will be booked next year, it said. While the bank didn’t disclose the impact on jobs, a bank spokesperson said the change won’t result in any staff dismissals.
This revamp caps a difficult year for SocGen, after its capital markets units, once considered its powerhouse, was hit hard when the coronavirus roiled global markets, triggering the bank’s worst quarterly losses in 12 years. The lender, which returned to profit, recently announced it would cut 640 jobs, mostly at its investment bank.
SocGen also unveiled targets for its online banking unit, Boursorama, seeking to reach 4.5 million customers by 2025 from 2.5 million currently. The costs to acquire new clients will will result in a cumulative loss of 230 million euros, with the unit turning profitable in 2024, the bank said.
The merged French retail unit will have about 10 million customers, including companies and individual savers, according to the statement. The board earlier approved the move in principle and the bank began a review in September headed by Sebastien Proto, who was promoted deputy general manager last summer in charge of the French retail operations.
At the combined retail business, SocGen expects its cost base to fall by more than 350 million euros by 2024 and 450 million euros by 2025 compared with 2019. About 70% of the 700 million-euro to 800 million-euro cost of merging the units will be booked in 2021, it said.
SocGen fell as much as 2.1% in Paris trading and was down by 1.8% as of 9:55 a.m. The 38-member STOXX 600 banking index fell as much as 2.7%.
In an effort to lower costs and make retail operations profitable, European banks have announced unprecedented plans to close branches in the last months. The closures were accelerated by the pandemic, which bolstered online usage by clients as they sought distance from public places to reduce the risk of virus exposure.
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