The European Banking Landscape Has New Powerhouses: French Lenders
By Noemie Bisserbe
PARIS -- France's biggest banks have rediscovered their mojo by becoming boring.
When Pascal Augé, an investment banker at Société Générale SA, was transferred to the French lender's cash-management unit -- which helps companies manage their cash flow -- he was surprised: "For years, cash management wasn't considered as a very sexy business," said Mr. Augé, who now heads Société Générale's global transaction and payment-services unit. "But we rediscovered the virtues of that business with the crisis."
Now, a few years later, the decidedly unfashionable business generates nearly as much revenue for the bank as securities trading.
Société Générale and crosstown rival BNP Paribas SA have emerged from the financial crisis, the eurozone debt crisis and long years of European economic stagnation as two of the continent's strongest banks -- and two of the few able to withstand the invasion from U.S. investment banks in Europe.
Société Générale had a return on equity of 9.5% in the first half of the year and BNP Paribas 10.6%, making them among the most profitable banks in Europe.
Part of their success has come from using dull but important service businesses, such as handling cash and securities, to attract clients they can upsell to investment banking and trading. The French lenders also have benefited from having long had a focus on corporate banking. France's big corporate sector has remained comparatively strong through years of economic stagnation on the continent.
While European powerhouses such as Deutsche Bank AG, Credit Suisse Group AG and Royal Bank of Scotland Group PLC remain steeped in restructuring, Société Générale is expanding its lead in equities trading and BNP Paribas is growing its fixed-income business.
Société Générale saw its market share in equities in Europe rise to 16.4% in 2017 from 14.2% in 2013, while BNP Paribas's market share in fixed income rose to 14.6% from 13.4% in the same period, according to a recent study by Goldman Sachs Group Inc. based on the revenue of the top seven European investment banks.