With strong first-quarter results, the French banking giant is back in the derivatives game it dominates??nd aiming for gains in U.S. and Asian investment banking
With its mainstay derivatives business picking up speed again, Paris-based Soci??t?? G??n??rale's (SCGLY) investment banking division is hiring staff in a push to build its fixed-income business and expand in the U.S. and Asia. "We are back to being a growth engine for the group," investment banking chief Michel P??reti?? tells Businessweek.com in an interview. On May 5, SocGen reported $1.38 billion in first-quarter earnings, substantially above analysts' estimates, including $715 million from investment banking, where revenues were up 34.8 percent vs. the fourth quarter of 2009. SocGen, the global No. 1 player in equity derivatives, saw that business shrivel during the financial crisis, but it's now recovering, with first-quarter revenues up 20 percent over the preceding quarter. "We've passed through the crisis," P??reti?? says. "We've been expanding and gaining market share in all areas," especially derivatives trading, such as fixed income and currency, as well as equities. Expansion Plans
Taking advantage of the rebound, P??reti?? says he plans to boost his division's 12,000-person workforce by 5 percent to 10 percent this year. He has set an ambitious target of boosting U.S. revenues by 50 percent over the next three years, while doubling the division's now-modest Asian revenues during the same period. He also wants to beef up the bank's mergers-and-acquisitions activity. All told, P??reti?? says he is targeting $2.6 billion per quarter in investment banking revenues this year. To advance its U.S. ambitions, SocGen on Mar. 22 hired Craig Overlander, a veteran bond trader who had worked at Wachovia Securities and earlier at JPMorgan Chase (JPM), to run its U.S. investment banking unit. "Western Europe is our backyard, but we have to expand on the dollar side," P??reti?? says. P??reti??, a former Bear Stearns banker who was hired at SocGen in 2008, in the aftermath of the J??r??me Kerviel rogue trading scandal, says he knows that competition will be fierce. Other big European banks such as Switzerland's UBS (UBS) and Germany's Deutsche Bank (DB) also have posted healthy first-quarter results, and UBS says it is hiring hundreds more staff members to strengthen its fixed-income business. But, says P??reti??, "We have the means to be ambitious."