Societe Generale’s “restructuring has been substantial,” although its balance-sheet reinforcing efforts are “still a measure behind” BNP Paribas SA (BNP)’s, Goldman Sachs analysts including London-based Jean-Francois Neuez wrote in a report today. “The funding tensions in 2011 prompted the French banks to accelerate efforts to restructure their balance sheets.”
The Paris-based lender climbed as much as 3.3 percent to 31.59 euros, the most in a month, and was up 2.7 percent at 31.43 euros by 3:58 p.m., the biggest gainer in the 40-member Bloomberg Europe Banks and Financial Services Index. The shares have added 11 percent in 2013, giving the bank a market value of about 24.5 billion euros ($32 billion).
Goldman Sachs analysts lifted their price estimate for Societe Generale’s shares to 42 euros from 40 euros previously, and raised its rating one level from hold. They kept their price target for BNP Paribas, France’s largest bank, unchanged at 67 euros, also with a buy recommendation.
Societe Generale’s core Tier 1 capital ratio, under Basel III rules, was at 8.7 percent at the end of March and the company aims to reach a level close to 9.5 percent by the end of the year, it said last month. BNP Paribas said in May that it had a Basel III core capital level of 10.0 percent at the end of the first quarter.
Societe Generale’s core capital level should reach 10.2 percent in 2014 and 10.7 percent in 2015, Goldman Sachs analysts estimated. BNP Paribas’s core capital level will probably reach 11.5 percent next year and 12 percent in 2015, they said.
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