SocGen CEO Sees Europe Firms Sharing Markets Pie With U.S. Banks

(Bloomberg) -- Capital markets won’t become dominated by a handful U.S. investment banks because clients will seek to spread risk among firms in Europe and elsewhere, according to Societe Generale SA Chief Executive Officer Frederic Oudea.

“I do not believe in a world where investment banking is just concentrated in five U.S. banks,” Oudea said in an interview with Bloomberg Television Tuesday at the World Economic Forum in Davos, Switzerland. “The amount of risk in the system would mean over-concentration. The clients don’t want that either.”

Alongside Wall Street players, some leading investment banks from other parts of the world will capture trading demand coming from corporate clients and also provide prime services or liquidity to big investment firms, Oudea said. Corporate clients will probably want to split their financial market needs over a basket of 10 to 15 “core banks” worldwide, he said, calling on Europe to play a bigger role.

Consolidation in Europe’s financial industry will “take some time” but there will be fewer banks on the continent in 10 years, he said.

“We need to develop capital markets in Europe,” Oudea said. “We are just in the infancy regarding this.”

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