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Societe Generale to buy Commerzbank unit
FRENCH Banking giant Societe Generale on Tuesday said it has secured a deal, subject to regulatory clearance, with German bank Commerzbank to buy its key equity markets and commodities business.
"This acquisition would be transformational for our activities in Germany as it would enable Societe Generale to reach a new scale in the leading eurozone economy," the French bank's deputy CEO Séverin Cabannes said in a statement.
The statement did not specify the value of the transaction.
It said the activities that would come under Societe Generale's control are based in Frankfurt, London, Hong Kong, Paris, Luxembourg and Zurich.
Societe Generale said the move would "reinforce the bank's global leadership in derivatives and investment solutions". It also said it would have a "positive impact" on its profitability.
Investors cautiously welcomed the move, pulling Societe Generale's share price up by 0.6 per cent in early Tuesday trading. Within an hour, the bank's stock price went flat.
Commerzbank's shares rose meanwhile by 0.7 per cent.
Commerzbank confirmed in a statement that an agreement had been reached. It said the transaction "would include transfer of trading books, client franchise, staff, and IT infrastructure".
It also said that it would enable it to cut 200 million euros (S$318 million) in costs by 2020 and that it generated 381 million euros in gross revenue in 2017.
"We are simplifying our business, we are contributing to our cost-cutting targets, and we are freeing up capital for the benefit of our core business with private and corporate clients," Commerzbank's CEO Martin Zielke said in a statement.
Commerzbank is 15.6 per cent owned by the German state.
In 2016, it had announced a plan to cut costs by refocusing on its retail and commercial banking activities, adding 73,000 new customers in its private and small business arm and 1,000 new corporate clients.
The bank, which employs 49,000 people, posted a 9.2 billion euro turnover in 2017. AFP