Societe Generale SA (GLE), France’s second-largest bank by market value, agreed to sell its Greek unit to Piraeus Bank SA (TPEIR) to reduce risks tied to Europe’s most indebted nation.
Societe Generale will sell its 99.1 percent stake in Geniki Bank (TGEN) to Piraeus for 1 million euros ($1.3 million), the Paris- based bank said in a statement today.
As part of the deal, Societe Generale will inject 281 million euros of capital into Geniki and buy 163 million euros in bonds from Piraeus. The sale will cut Societe Generale’s third-quarter net income by about 100 million euros.
Societe Generale is following Credit Agricole (ACA:US) SA in exiting Greece as concern lingers over the country’s future in the euro area. Credit Agricole agreed on Oct. 17 to sell its Emporiki Bank unit in Greece to Alpha Bank SA on terms that will cut its third-quarter net income by about 2 billion euros.
Societe Generale will have no funding exposure to Geniki after completing the sale, which is expected to close before the end of 2012. The Hellenic Financial Stability Fund approved the deal, the bank said.
Greece, heading for a sixth year of recession, is overhauling its banking system after lenders took losses on government-bond holdings. Geniki’s loan book is a fraction of the size of those at Greece’s largest banks.
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