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Societe Generale signals exit from Amundi with IPO plan
[LONDON] Societe Generale SA may sell its entire stake in Amundi in an initial public offering of the asset manager as Europe's banks come under pressure to bolster capital.
The two French lenders said on Wednesday they're planning an IPO of Amundi, which oversees about 954 billion euros (US$1.1 trillion), this year. Credit Agricole, which owns 80 per cent, will keep a majority stake, while Societe Generale owns 20 per cent. Amundi may be valued at about 8 billion euros, according to Jefferies LLC analyst Omar Fall.
Europe's banks are selling assets and scaling back businesses to bolster capital in the wake of the region's debt crisis. Societe Generale's buffers were eroded at the end of last year and the Paris-based bank faces a decline in activity and rising losses in Russia, where it owns one largest foreign lenders active in the country.
"It appears that SocGen may be increasing liquidity ahead of a potential worsening of conditions in some of their markets, like Russia," said Erin Davis, an analyst at Morningstar Inc. in Chicago, said in an e-mail.
The IPO will "provide liquidity to Societe Generale," the companies said in a statement Wednesday. Amundi will remain the "provider of reference for savings and investment solutions" for Societe Generale's retail and insurance networks for at least five years, they added.
Consumer-banking revenue more than halved in Russia in the first quarter, as an economic slump and sanctions curtail activity. European Union governments on Wednesday struck a preliminary accord to extend financial curbs against Russia by six months to the end of January.
Societe Generale reported a common equity Tier 1 ratio, a key measure of financial strength, of 10.1 per cent at the end of March, stable from three months earlier. The metric had dropped by 26 basis points in the prior three-month period.
The IPO would increase the measure by 20 basis points at the end of the year if Societe Generale sells the entire stake, according to the statement.
Societe Generale transferred a 5 per cent stake in Amundi last year to Credit Agricole in return for sole ownership of derivatives brokerage Newedge Group, which had previously been jointly owned by the two banks.
Mr Fall estimates that Amundi's valuation will reflect that of BlackRock Inc., or about 15 times next year's earnings. BlackRock manages US$4.8 trillion in assets.