How Societe Generale Private Banking has kept up with changing times

385
Photo: Facebook screengrab

SGPB, with Jean-François Mazaud, has kept pace with changing times. From being a small entity in its native France with an international presence across four continents, it has opted to achieve critical mass in locations important to the company’s vision.

Mr. Mazaud said recently, “In 2012, we reached the conclusion that the world of private banking was changing. We decided that although we had built excellent client relationships throughout the world, in order to extend our client base we needed to leverage synergies by achieving critical mass in the regions where the parent bank was most active.”

SGPB also realized then that changes in regulation as well as the need to reinforce investments in technological innovation were behind the increasing cross pressures around the globe for the finance industry.

He continued, “Back in 2012 we were still at the embryonic stage of digitalization. But we recognized that we would need to increase investment in developing our front office applications in order to be able to offer our clients a full suite of solutions in digital format within years rather than decades.” 

Therefore, the bank began to strip its outlets that were outside Europe. Another thing that SGPB did was to  revamp its operations in Switzerland, closing branches in Lausanne and Lugano while bolstering the ones in important locations such as Zurich and Geneva.

Mr. Mazaud says he is not remorseful over closing outlets in Asia, since expansion in private banking has slowed down. Additionally, this expansion is propelled by onshore Chinese wealth, a market normally not easily accessible to foreign banks. And finally, he cites the growth of local banks in Singapore and Hong Kong, which has caused them to viably compete with other international financial institutions.

According to Mr. Mazaud, “The result is that, if you dig deep into the numbers, very few non-regional private banks in Asia are profitable,”

He also maintains that banks can have clients in a country despite not maintaining a local presence there, citing SGPB’s success in this area. “Although we have scaled back on our presence outside Europe, we still have about 120,000 clients who represent 67 different nationalities.”

Now one of Europe’s 15 biggest private banks, SGPB still has room to grow in its core market in Europe, where on average its growth has been at 3 or 4 percent. In other areas, Mr. Mazaud says the bank has potential for double-digit growth, and their aim is to identify these areas.

SGPB is now known as a market leader in France, the biggest country in terms of private banking. Six years ago, only around 20 percent of the bank’s assets under management (AUM) was from France. This year, SGPB now has 60,000 clients across the country, and half of the bank’s total AUM of €120 billion is from France.

A second large growth market for SGPB is the United Kingdom, where it acquired Kleinwort Benson in 2016, now completely integrated with the company’s local banking unit under Kleinwort Hambros. This has successfully merged two of the most important brands in the financial services industry of the UK, with a total of 10,000 clients, who all have £1 million in minimum liquid assets each. Client satisfaction levels in the UK are higher than anywhere in the world, and Mr. Mazaud has expressed confidence that SGPB has room for further expansion.

“We believe we can do much more in the UK, at a reasonably low cost, by increasing the size of our existing operations and expanding into cities where we are not yet represented,” said Mr. Mazaud, asserting that more branches aside from those in Edinburgh, Cambridge, Newbury and Leeds will follow.

Concerning Brexit, the CEO of SGPB has this to say, “As for Brexit, we are better positioned than other banks because we have good strength and scale here in the UK and we are also part of a very large continental European bank. Therefore, we have the option of clients being able to either be served in the UK or serviced in some other EU location.”

SGPB’s third target market for expansion is Germany. The company recently acquired Commerzbank’s Equity Markets and Commodities (EMC) to this end. EMC is a major player in the industry of structure and flow products, and this acquisition has opened the door for taking full advantage of synergizing with Lyxor, Societe Generale’s investment management specialist, whose AUM is nearly €140 billion.

In 2017, Mr. Mazaud became head of Societe Generale’s Asset and Wealth Management division. Since SGPB’s primary goal is to protect its clients’ wealth, it counsels invests to keep portfolios that are well diversified as well as look into other possibilities such as structured products in order to alleviate the effects of a potential downturn.