Awards for Excellence 2020
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Societe Generale’s footprint in CEE has changed dramatically over the last four years. At the start of 2016, the French group had one of the largest banking networks in the region, covering 13 countries from Albania to Georgia.
Today, it has commercial banking subsidiaries in just three CEE markets – Russia, Romania and Czech Republic – plus corporate and investment banking operations in Poland and Turkey. The group also maintains representative offices in Nursultan and Baku to service public-sector clients and commodity producers.
Societe Generale is the first of the big regional banks in CEE to adopt this targeted approach, selling up in smaller countries and those where the group had insufficient scale so that it can focus more tightly on the largest and most important markets.
While this has limited SocGen’s on-the-ground presence, however, it has not so far had a noticeable impact on the group’s ability to provide financing solutions to clients across CEE.
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Aymeric Arnaud |
In debt capital markets it remained the clear leader among European banks for the number of Eurobond mandates executed in the current awards period, according to Dealogic, and behind only JPMorgan and Citi of the global players.
Much of this deal flow came from leveraging strong relationships with the full spectrum of public-sector, corporate and bank clients in SocGen’s five focus markets. However, the group also notched mandates from Kazakhstan – including a quasi-sovereign local currency Eurobond – and Montenegro.
“What makes Societe Generale unique is the diversity of the franchise we’ve maintained on the DCM front,” says Aymeric Arnaud, head of CEEMEA DCM. “Some competitors rely on euro-denominated sovereign flows, whereas we cover a full range of high-grade and high-yield borrowers across all asset classes.
“Our deals are also very balanced in terms of currency, with dollars accounting for around half of total volumes.”
Leading domestic market franchises in Russia, Romania, the Czech Republic and Poland add depth to Societe Generale’s DCM offering for CEE clients.
The group has also retained its appetite for putting its balance sheet to work across the region. According to Dealogic, only UniCredit, which has maintained an extensive physical network in CEE, deployed more financing via syndicated loans in the region in the 12 months to the end of March.
A recent example of SocGen’s willingness to support clients beyond its physical network came in March, when the group signed a €250 million loan to Montenegro to support the Balkan state’s Covid-19 response.
“It was not straightforward to be writing a cheque of that size for a single-B rated country where we no longer have an on-the-ground presence,” says Arnaud. “It proves that exiting markets doesn’t mean we don’t deliver services. At a time of crisis, we delivered a critical line of liquidity for the Republic of Montenegro.”
The transaction was also one of the first concrete results of an innovative collaboration with OTP, which bought six of Societe Generale’s subsidiaries in southeastern Europe, as well as its operation in Moldova.
The two banks have signed a partnership agreement that will see SocGen offer capital markets and advisory solutions to OTP’s corporate clients in markets where the French group is no longer present.
“OTP has the local knowledge but has limited capacity to issue bonds on international markets or structure complex project finance transactions, for example,” says Denis Stas de Richelle, head of CEMA region, global banking and advisory at Societe Generale. “It therefore makes sense to combine the talents of the two banks.”
Sustainable finance
Another area in which SocGen has led the way in CEE is sustainable finance, which has gained traction in the region over the last two years. The French group acted as bookrunner on two landmark green bonds last year – Raiffeisen Bank International’s seven-year preferred note in September and Czech developer CPI’s €750 million issue the following month – and has been one of the pioneers of sustainability-linked loans in Russia.
In September, it provided a sustainability-linked loan for Polymetal – a sector first for Societe Generale – and followed up in October with two ground-breaking transactions for Rusal, Russia’s first sustainability-linked pre-export finance facility and first international syndicated green loan.
The group has environmental, social and governance (ESG) specialists on the ground in Russia, Poland and Czech Republic. “For us as a bank ESG is a strategic priority and it is becoming increasingly important for our investors and clients in CEE,” says Stas de Richelle.
“For three years we have been systematically developing a full set of products and looking to see where we can push sustainable or positive impact finance.”
This combination of innovative financing solutions, a strong capital markets franchise and regional expertise makes Societe Generale a worthy winner of this year’s award for CEE’s best bank for financing.
