| BUSINESSWEEK ONLINE : FEBRUARY 15, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- EUROPEAN COVER STORY
SG Paribas: 'We Don't Need to Rival Goldman Sachs' (int'l edition) The evening after their deal was announced, Paribas Chairman Andre Levy-Lang and Societe Generale CEO Daniel Bouton explained the strategy behind their banks' merger to BUSINESS WEEK's Paris bureau chief, Gail Edmondson: BW: The big U.S. investment banks are eating everyone's lunch in Europe. How can you be successful in investment banking given the size of your franchise? Bouton: We don't need to rival Goldman Sachs or Merrill Lynch (MER). You don't look at Chase Manhattan as an investment bank. It combines investment banking with retail and has a strong franchise in the credit-card business. Overall, we will look more like Chase. We have a good research team. Our motto is: ''Be focused, and you can be profitable.'' BW: You have targeted a 15% return on equity by 2000, but profits in 1998 were buoyed by massive capital gains. How realistic is this target? Levy-Lang: Analysts are looking at the trees and missing the forest. We are a very profitable bank. We have all the ingredients to increase SG Paribas' profits. We are very confident about the 15% ROE. BW: Did AXA's Claude Bebear push for this merger because he was disappointed with Paribas' profits? Levy-Lang: The real incentive for the merger on both sides was that we realized, given the globalization of the business, given the fact that the euro is creating a revolution, given technology, that we are very complementary. The combination is unique.... We have a strong retail network and an effective discount broker under the same roof. BW: France is overbanked. Won't SG Paribas have to tackle significant cost reductions? Bouton:retail side are 26%--or 15% after taxes. That is more than some British banks. NatWest's, Barclays', and Midland's are lower. Our revenues are lower because of fierce competition. BW: Will you seek an investment banking partner? Bouton: It's too early for that question. You are talking to a two-day-old baby. BW: French institutions rank No. 1 in asset management in Europe. How can you wield that to advantage in the euro zone? Levy-Lang: Paribas does banking and insurance in 17 countries outside France. There is great potential. We have an agreement with Poland on pension-fund management. We can expand through joint ventures with our insurance company. BW: When will cross-border banking mergers begin in Europe? Bouton: When we are able to foresee profits from transnational mergers. We are not yet able to see when customers will cross over borders. It's more complicated because it's not only a matter of distance but brand loyalties, lending habits, and different tax structures. BW: Does France have a level playing field in banking, and is the government doing enough to create one? Bouton: No. We need normal rules of competition for all players. This is an urgent point in a country where depositors get a 3% net return from savings banks and inflation is under 1%. This has to be addressed. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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