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Lyxor sale shows big bank M&A will be piecemeal

Deals such as this leave deeper problems unsolved at Societe Generale and similar banks.

The logo of Societe Generale is seen on the headquarters at the financial and business district of La Defense near Paris

Societe Generale is billing a €825 million sale of asset manager Lyxor, best known for exchange-traded funds (ETFs), as the completion of a strategic reorientation process begun in 2018. But this refocusing, as it calls it, has come far short of turning the bank around.

Three years ago, according to Berenberg, SocGen was trading at a 20% discount to book value, while its French and eurozone peers were trading just below par. Today it’s even further behind, at a 60% discount to book value, while peers trade at a 30% discount.

In the past three years SocGen has cut costs and risk, especially in French retail and the investment bank. It has sold assets and simplified its business, including in central and eastern Europe, and now Lyxor, which it expects to sell to Amundi, majority-owned by Crédit Agricole.

In investment banking, SocGen is a second-tier player in a market where only the very strongest can survive

SocGen and its chief executive Frédéric Oudéa have tried hard to improve things recently. The bank has still underperformed, because it’s a fundamentally unattractive group of core businesses.