Société Générale: Czechs & balances
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Société Générale: Czechs & balances

A risk-aware strategy has allowed Société Générale’s operations in central and eastern Europe to perform relatively well overall since 2008. But its portfolio is a mix of good and bad, big and small businesses. And after the eurozone crisis, does the French bank have what it takes to achieve its ambitions in the region?

In many ways, Société Générale’s experience in emerging Europe before the eurozone crisis mirrored that of the majority of its competitors in the west. It undertook a first, tentative move into a region rich in convergence potential via purchases across the larger economies. Then followed an increasingly enthusiastic – and rather opportunistic – pursuit of assets in the farther-flung corners of the continent.

In one key respect, however, the French bank broke ranks. When rivals from countries such as Austria and Italy were happily buying market share through the open-handed distribution of foreign-currency loans to homeowners and smaller businesses across central and eastern Europe, SG refused to follow suit. Back then, as deputy chief executive Bernardo Sanchez Incera recalls, that was seen by many as a costly mistake.

Bernardo Sanchez Incera, Société Générale’s deputy chief executive
Bernardo Sanchez Incera, Société Générale’s deputy chief executive 

"If you offer mortgages in yen or Swiss francsat 1% in an economy where the usual interest rate is in double digits, it looks like a very good deal – and if you refuse to do so, you can damage your brand," he says.

Despite recognizing the risk to its regional operations, however, SG held the line and – except in euro-linked economies such as Montenegro and for larger corporations with foreign-currency cashflows – eschewed all involvement in the foreign-currency lending market.

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