SEA energy, natural resource key sectors for SocGen

[SINGAPORE] Societe Generale corporate and investment banking (CIB) will focus on its core strengths in the energy and natural resource sectors to expand in South-east Asia, says a senior executive.

Over the next three years, the French bank is ready to deploy capital to expand its project and infrastructure financing businesses, said Didier Valet, Societe Generale global head, CIB, private banking, asset management and securities division.

It will also be able to fully tap its latest acquisition, Newedge - one of the world's largest derivatives brokerages - to offer customers brokerage and clearing services.

Giving an update on the transformation of France's third largest bank post 2008 global financial crisis, Mr Valet said Societe Generale is "fitted for the new environment and ready to deploy capital".

Earlier this year, Societe Generale sold its Asian private banking business - which had US$12.6 billion in assets under management - to DBS Group Holdings for US$220 million.

Private banking business in Asia is very expensive and a small outfit was not sustainable, Mr Valet said in an interview with The Business Times.

Paris-based Mr Valet was in Singapore recently to celebrate the bank's 150th anniversary with colleagues and clients.

"We have some global targets. We are ready to commit resources to expand structured financing. We have expertise in project financing, infrastructure financing and, in natural resources, we are one of the world leaders," he said.

CIB contributes about one-third to group revenue. Europe accounts for 75 per cent of CIB's revenue, with the rest split between the Americas and Asia.

For Q2 2014, the bank's global banking and investor solutions (which includes CIB) posted a net income of 585 million euros, (S$945 million), up 28 per cent from a year ago.

"We aim to grow the revenue of this division by 10 per cent a year for the next three years," he said.

It will be done by leveraging on the quality of the teams which are based in Paris, New York, London, Hong Kong and Singapore.

One of its big scoops this year was closing the US$1.17 billion senior project financing for the Sarulla Geothermal Project in northern Sumatra, Indonesia. Sarulla will be the world's largest "greenfield" geothermal power generation project and involves the construction of a 351 gross megawatt geothermal power station, with commercial production expected to begin in 2016. Project completion is scheduled for 2018.

Societe Generale served as the "technical bank", coordinating both reserves and technical consultants and conducting due diligence. The bank also played a critical role in structuring the deal.

The bank is one of the most important players in the specialised wind, natural gas, coal and geothermal power generation sectors, and it is involved in projects in the US, Africa, Australia and Papua New Guinea, Mr Valet said.

And in capital markets, Societe Generale's Newedge unit will increase its ability to offer equity derivatives solutions - in particular commodity derivatives to clients, he said.

Last year, Societe Generale bought out Credit Agricole's 50 per cent stake in Newedge, making it a wholly owned unit, and allowing it to fully service institutional clients such as hedge funds. Newedge provides a wide range of trade and post-trade services to institutional and corporate clients - in particular through execution and clearing services on listed options and futures contracts on fixed income, foreign exchange, equities and commodities, and on over-the-counter markets.

Newedge, which posted revenues of 640 million euros in 2013, has 150 employees in Singapore. Societe Generale has 220 staff here. Globally, Newedge has 2,000 staff. In Asia, the brokerage is active in Korea, Japan, Singapore, Hong Kong, India and Australia.

In August, the bank also signed a memorandum of understanding with Indonesia's PT Danareksa Sekuritas to cooperate in key areas of investment banking, global markets and other advisory services.

It wants to work with multinationals and international Singapore companies when they diversify to Latin America, Europe and Africa.

Giving an example, Mr Valet said Societe Generale is the exclusive financial adviser to China's Fosun in its bid for Club Méditerranée. Chinese conglomerate Fosun hopes to develop the holiday brand in China.