SocGen CEO Pours Cold Water on Merger Speculation

(Bloomberg) -- Societe Generale SA Chief Executive Officer Frederic Oudea poured cold water on speculation about a potential tie-up with foreign banks, days after being mooted as a target for Italy’s UniCredit SpA.

“I don’t believe at all” in European cross-border mergers, Oudea said Thursday at a conference in Frankfurt, highlighting that capital requirements for too-big-to-fail institutions discourage large mergers in Europe. While he didn’t mention the Italian rival by name, Oudea was reacting to analysts’ questions on M&A by saying that seeking a big tie-up is not a priority for SocGen. He alluded only indirectly to UniCredit, by joking that France has qualified for this year’s soccer World Cup finals, whereas Italy hasn’t.

The “most obvious” consolidation for European lenders is to grow at domestic level, he said.

SocGen, France’s third-largest bank by market value, has repeatedly denied this week “any board discussions regarding a potential merger with UniCredit.”

The Financial Times reported Sunday that Unicredit, led by SocGen veteran Jean-Pierre Mustier, has been working on the idea of a merger for several months. It cited people close to the situation. The report said discussions were at an early stage, and may be challenged by Italy’s recent political turmoil.

Oudea, 54, didn’t update SocGen’s revenue or profit targets for 2020. He also said he’s convinced the bank has an edge in investment banking and it will remain a “disciplined” lender, despite the fact that levels of bad-loan provisioning are at record lows.

On Monday, SocGen agreed to pay about $1.3 billion in penalties as part of pacts with U.S. and French authorities to put an end to investigations into interest-rate manipulation and the bribery of Libyan officials, two of its three main legal issues.

SocGen may settle a U.S. probe into alleged violations of economic sanctions within weeks or months, Oudea said, stressing the historic nature of such issues. SocGen has “no significant litigation related to our conduct in the last six years,” he said.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Geoffrey Smith, Paul Armstrong

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