|Jean-François Mazaud and Patrick Folléa|
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“It is critical to be a leader first in your domestic country in the segments you have chosen,” says Jean-Francois Mazaud, head of Société Générale Private Banking.
He claims it is a trend the whole industry is seeing. “The banks with a strong domestic customer base will benefit as the industry is evolving. This is a trend you are seeing everywhere – this hunkering down into the domestic market and then using the synergies with the commercial and investment bank there while selecting other countries and regions where you can play to your strengths.”
His firm had a stellar 2014 in France. In February last year, the private bank formed a partnership with the retail firm so that retail clients with more than €500,000 could become part of the private bank if they wanted to.
Société Générale Private Banking went from having €20 billion in assets to €50 billion almost overnight. In addition, new clients joined. In the first three quarters of last year, close to €1.8 billion in net new assets were taken on by Société Générale Private Banking in France.
“Our goal had been to not lose clients in the reorganization,” says Mazaud. "We couldn’t have imagined we would win so many new clients."
The bank has also started implementing an IT front-office programme costing €80 million last year. Yet while the demand for digital service is clearly well developed among private clients, Société Générale Private Banking’s new strategy underlines the importance of the bricks-and-mortar branch – something that other banks have questioned.
As part of the re-jig, qualifying clients were asked if they wanted to stay with their day-to-day branch, with access to all the private bank’s experts, or if they would rather be with a specialized private-banking centre. Some 95% opted to stay with the branch network.
It’s an interesting outcome that private banks in other countries might learn from.
“Proximity is key. Our private-banking services are now available in the 2,300 branches of the SG network in France. You can get the same service in Paris and in Brittany. This was a big shift for France’s wealthy. It was almost non-existent to have this level of proximity and expertise going so deep into the country,” says Patrick Follea deputy head of Société Générale Private Banking and CEO of the French private bank.
On the increase in AUM, Follea says the bulk of the new assets were came courtesy of SG's investment banking business: family businesses were sold, and the owners subsequently became clients of the private bank. “That is where the group’s mid-cap investment banking business has been integral. They address the business issues of the company itself and we can address the issues related to managing the private wealth of the owner and family."
Outside France, last year saw the sale of SG's Asian private banking business to Singapore-based DBS. Mazaud says he expects more activity from banks like DBS: regional players from emerging markets moving into private banking from either retail or investment banking roots. He points to BTG Pactual as another example.
Société Générale Private Banking is also present in the UK, Belgium, Luxembourg, Monaco, Switzerland and Dubai. Last year it launched in Croatia, following on from Morocco in 2013.
Says Mazaud: “2014 was a real crossroads for the industry. Banks like us had to make strategic choices to focus on where they had expertise. That means retrenching or redeploying. Whether it is Swiss banks, US banks, British banks – all the key players have been adjusting their scope to the new parameters. Players have understood that it is more rewarding and efficient to concentrate on their strengths. The days of sticking a flag in multiple countries here, there and everywhere are over. Size matters more now because of the increased cost of doing business. Customer needs are evolving as are regulations so if you don’t have €7 billion to €10 billion in each centre it is difficult to be a serious player in that centre.”