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Société Générale’s private banking division gets €31 billion AUM boost

The French bank adds more than 80 private bankers and closes the gap with BNP Paribas on asset under management.

Société Générale on Tuesday announced it is overhauling its retail and private banking divisions so that French clients with more than €500,000 at the retail bank will be with the private bank. It means a leap from €19 billion to €50 billion in AUM in France for the private bank.

Up until this year, the threshold for the private bank had been €1 million of investable assets, and there was no cross-selling or interconnection with the retail bank. Clients were required to have two separate accounts if they wanted to bank with the retail bank and the private bank.

Patrick Folléa, head of private banking France at SocGén

Patrick Folléa, head of private banking France at SocGén, says the private bank is still independent from the retail network, but adds that this new move to develop its relationship model “was a natural evolution for the private banking arm”, which was started relatively recently, in 1996.

“It was essentially a Paris-based private bank and then in 2008 we set up a partnership with SocGén’s retail bank,” he says. “By 2013 we had opened private banking centres in 11 cities across France. Now, with this new organization, which became effective on January 1, 2014, the private bank will be present in 80 towns and cities around the country.”

The retail-bank customers being migrated to the private bank will retain their client adviser in their usual branch, but will now also be offered a private banker. “We have 80 private bankers today in France and we aim to increase this by 160, rising to more than 200 private bankers and experts,” says Folléa.

Most of those will come from the retail network and will be trained in-house.

“It was not efficient to have a separation between the retail and private bank,” says Folléa.

The new organization enables the private bank to grow in its domestic market, even though the country’s growth in wealth has slowed. The rate of growth in the private banking market in France was 7% to 8% in 2007 but it is now nearer to 3% to 4%.

Folléa says not only will the new organization of SocGén’s private banking increase growth with existing clients – who will now have access to private banking products and services – but also that it will serve to attract new clients from outside SocGén, who can become clients of the private bank and operate a single account in the local retail branch.

While €500,000 seems a low threshold for a private bank, Folléa says many retail clients with this level of assets probably also have additional assets with other banks, as well as investments in real estate.

“Very quickly you get to a client with more than €1 million in overall wealth, so it makes sense to keep the entry threshold low and try to increase share of wallet,” he says.

Elsewhere in the domestic market, banks have thresholds as low as €150,000. Competitor BNP Paribas’s threshold is €250,000.

The move finally puts SocGén closer to rival BNP Paribas – the only other large retail bank in France with a private bank. BNP Paribas has €73 billion in AUM within its French private banking network.

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