Photograph of Société Générale Private Banking global chief executive Daniel Truchi Société
Générale has set itself an ambitious target to double private
banking assets and hit €150bn by 2015. Nicholas Moody talks to
Daniel Truchi, its global private banking chief executive, about
growing up fast and where €70bn new client assets are coming
from.

 

If Société Générale’s private bank
were human, it would now be entering its teenage years. Established
in 1997, the wealth management arm of the French-based bank is
starting to change. Like most thirteen-year-olds, it is about to
undergo a growth spurt making it bigger, stronger and potentially
more troublesome. As it spreads and reaches deeper into the
emerging markets, we ask if this teenager is about to get some
growing pains.

Société Générale Private Bank is
sprouting. Its two-stage growth spurt, named Ambition 2015, aims to
almost double assets under management in the next five years.

“It is an ambitious plan, but it is
highly achievable,” says Société Générale Private Banking global
chief executive Daniel Truchi.

 

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

In the market for
acquisitions

The spurt will happen in two
phases: 2010-2012; and 2012-2015 – using largely organic methods,
although Truchi does not rule out growth by acquisition.

“We are still open to suitable
acquisition that makes sense to our business,” he says.

“We have seen a number of banks,
but we did not bid aggressively. We found in those potential
acquisition something we would not like to have because it was not
complementary, maybe it was too mass-affluent or had
difficulties.

Truchi says it eyed up several UK
and Swiss banks, one of which was rumoured to be Kleinwort Benson,
although he declines to comment. It also plans to increase its
total number of relationship managers by about 70% to about
1200.

 

Beefing up operational
platforms

“It is not a number that has been
plucked out of our hat,” responds Truchi when asked how the
French-based bank plans to grow its private bank assets by almost
€70bn ($97.5bn) in five years.

“It is a very carefully designed
business plan. It comes from beefing up our operational platforms,
beefing up our product branch, developing our marketing skills and
targeting ultra high net worth [UHNW] individuals,” he says.

“We have a very strong leadership
in UHNW, above €25m assets under management [AuM], and we want to
continue targeting this type of client.”

Société Générale’s growth plans
will be helped by a relatively stable financial performance. In
2009 it recorded net inflow of €3.1bn and at 2009 year end AuM
stood at €75.4bn, a 13% increase on the 2008 year-end.

In the second quarter of fiscal
2010, net income at its private banking unit dropped to €23m,
falling 63.5% from €63m in the comparable period of 2009. The
private banking unit’s assets under management totalled €82bn at
the end of June 2010, including an inflow of €0.9bn in the second
quarter of 2010.

 

Ambition
roadmap

Graphic representing Societe Generale's assets under management targets for its Ambition 2015 planIf Ambition
2015 is the objective, how will Société Générale get there?

A crucial strut in its ambitious
growth projections is built on expanding in many different markets
using its retail network to provide private banking services to its
existing clients.

Its global strategy, says Truchi,
is to develop its business in particular in Eastern Europe, the
Middle East, South America as well as Asia, continuing a trend that
sees 85% of its business occurring outside France.

A re-jigged global market manager
approach to worldwide clients will also help.

“We have set up global market
managers for a number of worldwide clients: Indian, Non-resident
Indians, Middle Easten, Russian, French Internationals and South
Americans,” Truchi explains.

 

Developing key client
segements through global managers

“Each global market manager has
teams anywhere in the world where the clients are: for Indians for
instance we have a presence in India, Dubai, Singapore and London.
The strategy is to develop this segment of clients wherever they
are in the world.”

In the Middle East it has set up a
three branch network in Dubai, Abu Dhabi and has a bank licence in
Bahrain.

Truchi says SG Group is making a
concerted push in Eastern Europe where it has a large network in
Romania, the Czech Republic and Russia. SG Group has more than 700
branches in Russia today due to its purchase of BSGV Banque Société
Générale Vostok about seven years ago and Rosbank.

China, Russia, West and North
Africa, Eastern Europe, the Mediterranean Basin and the UK – are
all areas of new activity for the French bank. Even France is
getting in on the act. The home nation is one of the bank’s leading
units in net new assets managed after it launched a joint venture
with its retail network in France, meaning it has six branches
outside Paris and two in the capital.

 

Asia-focused, not
Asia-dependent

Truchi says SG Group has the
intention to develop its domestic presence in China where it is one
of only a handful of European banks to have a full banking
licence.

“If you don’t have a large retail
network in China, it is difficult to develop private banking
domestically on its own. It is the same in Russia; we have a
project to develop our Russian domestic operation,” he says.

Asia is important to Société
Générale but not the El Dorado some make out (see Truchi’s comments on Asian recruitment
bubble
). Truchi says although the bank’s strategy in Asia
is “aggressive” it is not the only development it is putting energy
into.

“There is much more market share to
gain in Eastern Europe, Middle East, Africa or Mediterranean base,
or even South America,” notes Truchi. “Our strategy is to move the
[development] in different locations and in regions in countries at
the same time not depending only on one of them.”

 

Not all trouble
free

But it has not been all trouble
free (see Societe Generale Singapore court
case
). In February the bank was forced to report
“anomalies” in accounts managed by one of its private bankers in
Singapore to the Monetary Authority of Singapore, the city state’s
central bank.

France’s second-largest bank
launched an internal audit mission to investigate the anomalies and
said it had immediately informed other clients whose accounts were
overseen by the private banker. Truchi says the investigation is
ongoing “but it will not affect our business plan in Singapore or
anywhere”.

Société Générale is a making
concerted push in virtually every market but has been noticeably
silent in the world’s largest wealth market: the United States. The
death of former Rockefeller chief executive Jim McDonald last year
led to a year-long search for a new chief executive at the US
multi-family office.

 

Re-designing US &
family office strategy

Reuben Jeffery, a former Goldman
Sachs managing partner, started in September and the rebranded
Rockefeller Financial, alongside Société Générale, is setting out
to redesign its US and family office strategy.

The bank holds a 32% stake in
Rockefeller Financial which has $25bn AuM. Truchi says it is
looking to develop the number of products and services offered to
multi-family clients and is set to “do something in the US together
with Rockefeller”, although he remains tight-lipped on exact
details.

Société Générale’s closest rival,
BNP Paribas, has been making strong gains following the purchase of
Fortis. When challenged about the large battle Société Générale
faces to take on its larger competitors, Truchi points the finger
at rivals that lump many non-private banking revenues into their
AuM figures.

“In terms of financial
communication, when you merge with the retail network, fund
management – it inflates your figure tremendously,” he insists. “We
are not in that framework; we publish only the figures that are
international private banking.”

“We don’t compare ourselves against
UBS, Credit Suisse, Citi or HSBC – those are the four big ones. But
if we take ABN AMRO; BNP Paribas, Deutsche Bank; Julius Baer and
RBS Coutts – we are on the same league,” he adds.

The bank’s confidence in its
abilities are illustrated by Truchi’s talk on consolidation.

“We think the consolidation will
continue to take place,” Truchi adds. “We will be looking carefully
should there be a small, medium or large acquisition. SG Group has
the strength to buy out, not only financial strength, but the
profitability for doing it.”

 

An aggressive
2011

If 2010 is about adapting and
beefing up its existing platform of products, servicing and its
global market management, 2011 could be more radical.

“In 2011 we will start to be more
aggressive in terms of development,” says Truchi. Ambitious
aggression is what will be needed if this private banking teenager
is to hit the heights expected of it.

Graphic showing emerging merkets and relationship manager targets of Societe Generale's Ambition 2015 plan