SocGen ready to repay aid
SOCIETE Générale launched a €4.8bn rights issue yesterday as it seeks to repay €3.4bn (£3.1bn) worth of state aid and build a war chest for possible acquisitions.
The bank joined French rival BNP Paribas in seeking to exit government support, saying that the cash call would allow it to pursue “external growth opportunities”.
However, SocGen said in a statement that it had no plans to renege on its commitment to lend more into the French economy, or to abide by G20 guidelines on remuneration.
The bank will use the money to pay back €1.7bn worth of non-voting ‘B’ shares subscribed to by the French state, as well as €1.7bn in subordinated securities.
Some of the remaining €1.4bn will be used to buy a 20 per cent minority interest in Credit du Nord bank, valued at around €510m, from European public sector banking specialists Dexia.
SocGen, led by chief executive Frédéric Oudéa, said the capital raising would give it a core tier one capital ratio of around eight per cent, but would have no impact on earnings for 2010.
The move signalled a brighter outlook for European banks, following the decisions of Italy’s UniCredit and Intesa Sanpaolo to reject an offer of state support.
RBS and Lloyds in the UK are also considering cash calls.
EUROPE’S BANKS GO IT ALONE
Bank Country Capital-raising State aid
SocGen France €4.8bn €3.4bn
BNP Paribas France €4.3bn €5.1bn
UniCredit Italy €4bn rejected
Intesa Sanpaolo Italy €1.5bn rejected
ANDREA ORCEL
GBM, BANK OF AMERICA MERRILL LYNCH
SocGen’s cash call is being managed by the group’s own investment bank as global co-ordinator, lead manager and joint bookrunner.
JP Morgan, Merrill Lynch and Morgan Stanley are acting as joint lead managers and bookrunners.
Merrill Lynch’s team will be led by Andrea Orcel (left), executive chairman of global banking and markets for Bank of America Merrill Lynch.
He is joined on the capital-raising by Stephane Courbon and Meritxelle Maestre, both managing directors in the financial institutions group.
The offering is at €36 per share, two new shares for nine existing shares, at a 26.9 per cent discount to the ex-rights closing price of 5 October.