(BFM Bourse) – The Banque de la Défense announced on Friday a plan to sell two subsidiaries in Morocco for an amount of 745 million euros. This announcement follows another sales project communicated the day before, which reassures the market which was firmly awaiting sales from the La Défense bank.
The pace of sales is accelerating at Société Générale. The La Défense bank announced this Friday contracts to sell its shares in two subsidiaries in Morocco, Société Générale Marocaine de Banques and the insurance company La Marocaine Vie to the Saham group, an investment company owned by the Moulay family Hafid Elalamy, a former minister.
“The Saham group would thus take over all of the activities operated by these subsidiaries and their customer portfolios, as well as all of the employees of these entities,” explains Société Générale, which expects the transaction to be finalized by the end of this year.
The amount of the sale amounts to 745 million euros and will have a positive impact on the CET 1 solvency ratio (equity compared to risk-weighted outstandings) of 15 basis points, or 0.15 point percentage. The bank warned that this proposed sale would have a negative impact on its first quarter results of 75 million euros.
On the Paris Stock Exchange, Société Générale takes off, gaining 3.4% around 3:30 p.m., the largest increase in the CAC 40. The market welcomes the group’s apparent desire to increase the pace of its sales of strategic assets.
Steps in the right direction
The day before, the establishment had already entered into a memorandum of understanding to sell its professional equipment financing activities to the BPCE group (Banque populaire Caisse d’Epargne) for an amount of 1.1 billion euros. This transaction should have a positive impact of 25 basis points on the group’s CET 1 ratio.
In a note published Thursday evening, UBS welcomed a “step in the right direction” following the announcement of this sale to BPCE. She added that other measures to increase the solvency ratio, such as other disposals, are however necessary to generate an appreciation of Société Générale’s stock market multiples.
Asset sales thus constitute a nerve center for the evolution of Société Générale shares due to its CET1 ratio. It should be understood that this solvency indicator is closely followed by the market and analysts.
Societe Generale had a ratio of 13.1% in 2023 and intends to reach a figure of 13% in 2026.
However, UBS calculates that in 2025 this ratio will suffer several negative impacts linked in particular to Basel IV prudential regulation (85 basis points). Restated for these elements and all things being equal, it recalculates a 2023 ratio of approximately 11.8%.
Other sales to come?
One way for Société Générale to strengthen its solvency ratio is to sell non-strategic activities. Numerous press reports have reported various potential transfers in recent months. In addition to the sales of professional equipment financing businesses and activities in Morocco, which had already been reported, indiscretions from several media outlets had reported the study of the sale of private banking in the United Kingdom, Switzerland, securities businesses, the German bank Hanseatic Bank, or even activities in Romania as well as in Ivory Coast, Senegal and Benin.
By taking all the potential transfers mentioned by the media and which would correspond to the criteria (few synergies, an unsatisfactory cost in terms of equity) mentioned to Morgan Stanley by the financial director, Claire Dumas, the American bank estimated that Société Générale could free up between 1.75 and 2.91 percentage points on its CET 1 ratio, while limiting the impact on its profits (16%).
Morgan Stanley judged, however, that selling activities representing an impact of 50 basis points to 100 basis points of the CET 1 ratio would be sufficient to allay market concerns about its solvency ratio and could thus trigger an appreciation of its stock market multiples.
Societe Generale is therefore not very far from it since the two disposals announced in recent days should increase its CET 1 ratio by 40 basis points by 2025. The bank will publish its first quarter results on May 3.
Julien Marion – ©2024 BFM Bourse
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