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The Woman Making Over Belgium's Grande Dame (Int'l Edition)

International -- European Business: BELGIUM


New SGB chief Morin-Postel plans to slim the giant down

Christine Morin-Postel is not quite at home as she strides past the crystal chandeliers and Flemish tapestries at Societe Generale de Belgique's headquarters in Brussels. "My tastes are more modern," she says. Belgium's biggest holding company is about to learn just what Morin-Postel means. Recently named chief executive of the sprawling, 175-year-old concern--the only woman CEO of a major quoted company in Europe--she is hardly shy about her intention to update the Old Lady. "She must become a much younger woman," Morin-Postel says with a grin.

It will be no simple makeover. SGB once had stakes in upwards of 1,200 companies, which accounted for more than a third of Belgium's output. Its interests still include steel, mining, finance, electricity, auto parts, and plastics. Now, Morin-Postel wants to pull SGB away from the Continental tradition of conglomerate capitalism. As she sees it, business done behind closed doors through holding companies is yesterday's method. Reflecting changes now sweeping Europe, Morin-Postel intends to adopt a more Anglo-Saxon style by selling off noncore assets and making the company more responsive to shareholders. "Generale de Belgique had too many lines of business," she explains. "Now, we're going to focus on two--financial services and public utilities."

Morin-Postel, a 51-year-old Frenchwoman who arrived from Paris-based Suez Lyonnaise des Eaux, has already started down that road. On Apr. 7, Suez said it intends to acquire the 37% of SGB it doesn't already own. That will tighten Suez' control over SGB's Tractebel electricity company, which made $1 billion last year on revenues of more than $10 billion. Morin-Postel is also trying to merge Generale de Banque, Belgium's biggest bank, and Fortis, its biggest insurance and financial-services company, in which SGB holds stakes. The new group would have a market capitalization of $37 billion.

Investors like the new look. Four months ago, SGB was trading at a 23% discount to a net asset value of $116 a share. Today, the discount is 4% and would vanish once SGB is folded entirely into Suez, since shareholders would then be invested in the French parent. "No one wants holding companies," says Philippe Verschuere, who follows SGB for KB Securities in Brussels. "A Suez takeover and the creation of a strong, focused company would eliminate any reason for a discount.""SORTER-OUTER." But reshaping SGB carries risks. When Compagnie de Suez (as it was then known) bought its initial stake in SGB 10 years ago, Belgians were traumatized by foreign control of their largest company. Full French ownership could still create a backlash. When Suez merged with Lyonnaise last July, Belgian Prime Minster Jean-Luc Dehaene won guarantees on Tractebel's autonomy. Even getting the Belgians to work together is difficult: Fortis and Generale de Banque have been talking for weeks without success.

But Morin-Postel has navigated rough waters before. She joined Lyonnaise des Eaux in 1979 and in 1995 moved to Suez, where she took on the company's troubled property portfolio. She swiftly took a $4 billion charge and sold off a large chunk of bad debt. "It was a remarkable performance," says Eric Ravary, an analyst at Credit Lyonnais.

She brings the same waste-no-time attitude to SGB. Her first success was to reassure Tractebel's CEO, Baron Philippe Bodson, who feared the French would block his expansion plans. Now, Morin-Postel must preside over the marriage of Fortis and Generale de Banque. She is convinced the two midsize institutions have no future as separate operating entities after Europe's single currency is introduced and competition revs up. Together, though, they would rank among Europe's 10 largest institutions.

Morin-Postel hints at a deal any day. But she's unlikely to stop there. She might sell back the new financial institution to Belgians in exchange for a stronger French say at Tractebel. "The Belgians would get a big bank and the French their big utilities," says a London-based analyst who follows SGB. "It would take quite a fixer to pull that off, but Morin-Postel is quite a sorter-outer."By William Echikson in Brussels

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