Societe Generale (SOGN.PA), France’s third-biggest listed bank, and U.S. investment management company Alliance Bernstein (AB.N) plan to form a joint venture focusing on global cash equities and equity research, they said on Tuesday.
The venture with Alliance Bernstein comes as SocGen aims to keep up with bigger and more profitable competitors such as BNP Paribas (BNPP.PA) in France and leading Wall Street banks Goldman Sachs (GS.N) and JP Morgan (JPM.N).
SocGen plans to take a 51% interest in the venture, with an option to take 100% ownership after five years, the French bank said, adding that the business would boost its profit from 2025 onwards. The deal is expected to close before the end of 2023.
SocGen declined to say how much it would be pay for the initial 51% stake.
Shares in SocGen were down 0.2% by 1024 GMT. Analysts said the financial impact of the deal looked limited but both Credit Suisse and Jefferies viewed the partnership as a positive development.
“Bernstein’s research & SocGen’s equity capital markets, derivatives and prime capabilities offer good complementarity, which would allow for more scale, a wider range of services and some more synergies, increasing the profitability of this business,” said analysts at brokerage Jefferies, which has a ‘buy’ rating on SocGen shares.
LONDON HQ FOR NEW VENTURE
The joint venture will be run as a long-term partnership under the Bernstein name and will be headquartered in London.
Robert van Brugge, CEO of Bernstein Research Services, will become CEO of the new entity for an initial term of five years, with Stephane Loiseau, head of SocGen’s cash equities business, becoming his deputy.
Last year, SocGen’s cross-town rival BNP Paribas bought the remaining 50% stake in cash equities execution and research firm Exane, and is now working to expand Exane’s footprint in the United States.
Similarly, linking up with Alliance Bernstein should help SocGen’s presence in the United States.
Slawomir Krupa, SocGen’s head of global banking and investor solutions and its future group CEO, said the combination would create an “undisputed leader” in equities.
Krupa will replace CEO Frederic Oudea next year. Under Oudea’s leadership, SocGen streamlined operations and refocused its corporate and investment banking unit, which had been hit by poor trading results in recent years.
In its third-quarter results published this month, SocGen said its equity business made 806 million euros of revenue out of a group total of 6.83 billion. The bank’s trading in fixed income and currencies also helped offset a decline in deal-making and share sales.
($1 = 0.9727 euros)