Societe Generale Weighs Closing Hundreds of French Branchesby
French bank to `accelerate' an overhaul of its network
Societe Generale aims to be leaner, less bureaucratic
Societe Generale SA is considering shutting hundreds of bank branches in France, following the example of competitors as more clients go online.
The bank may close about 400 branches, or 20 percent of its French network, the Force Ouvriere union said in a statement on Monday. Over the next five years, the bank wants to “accelerate” an overhaul of its network that began with 40 branch closures this year, though the number of additional closures hasn’t been finalized, Societe Generale said. The lender said it will provide details on the revamp later this year.
“These actions are symptomatic of an environment where the outlook for revenue generation is weak,” said James Chappell, an analyst at Berenberg Bank in London. “You need to work on your cost base.”
Societe Generale is reorganizing its branch network as consumers cut back their visits and instead use online banking. French banks, which like UniCredit SpA and Barclays Plc aim to be leaner and less bureaucratic, are also grappling with low interest rates that are weighing on revenue growth.
“French retail strikes us as being one of the main drags when looking at their operating efficiency,” HSBC analysts Lorraine Quoirez and Robin Down wrote. “Cost rationalization looks necessary.”
Societe Generale said the overhaul of its retail network will focus on urban areas and will result in an increase in the average size of its outlets. The French network consists of more than 2,200 branches, excluding the Credit du Nord brand. Societe Generale’s French consumer-banking unit generated net income of 419 million euros ($470 million) in the second quarter.
While banks in France have eliminated about 3 percent of branches since 2010,
there was a 13 percent drop across the euro area during the same period, according to the European Central Bank.
Societe Generale rose as much as 1.7 percent in Paris trading. The shares were up 1.6 percent at 38.69 euros as of 12:39 p.m. The stock has fallen 8.5 percent over the past three months, less than the 15 percent drop of the 46-member STOXX Europe 600 Banks Index.