Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Rogue trader, euro zone crisis and war, Socgen's CEO ends 'bumpy' ride at top

Published 18/05/2022, 16:02
Updated 19/05/2022, 06:03
© Reuters. FILE PHOTO: French bank Societe Generale Chief Executive Officer Frederic Oudea attends a news conference to present the company's 2015 annual results La Defense near Paris, France, February 11, 2016.    REUTERS/Benoit Tessier//File Photo

© Reuters. FILE PHOTO: French bank Societe Generale Chief Executive Officer Frederic Oudea attends a news conference to present the company's 2015 annual results La Defense near Paris, France, February 11, 2016. REUTERS/Benoit Tessier//File Photo

By John O'Donnell and Julien Ponthus

FRANKFURT/LONDON (Reuters) -Societe Generale CEO Frederic Oudea, who navigated the French bank through a rogue trading scandal and the euro zone crisis, will leave next year, ending a tumultuous 15 years at the top.

The longest-serving chief executive of a major European bank, Oudea took charge at the height of the 2008 financial crisis as the bank grappled with the multi-billion-euro fallout of a rogue trading scandal.

A student of France's elite Polytechnique engineering school and of the National Administration School, whose graduates include French presidents Jacques Chirac and Emmanuel Macron, Oudea started his career in the civil service before becoming one of the country's best-known bankers.

He prepares to leave as the bank struggles with the aftermath of a pandemic and the economic uncertainty created by war in Ukraine.

"It's been a very bumpy ride," said Jerome Legras of Axiom Alternative Investments, who said some investors were frustrated by what they deem the bank's modest progress.

In common with many European peers, the share price of Societe Generale (EPA:SOGN) never recovered from the 2008 debt crisis and at about 24 euros ($25.24), is less than half of its level when Oudea became CEO.

2008 ROGUE TRADER SCANDAL

Oudea became Societe Generale's finance chief in 2003 but long played a secondary role to Jean-Pierre Mustier, then head of Socgen’s investment bank and considered the likely future CEO.

The scandal in 2008 over a 4.9 billion euro loss triggered by trader Jerome Kerviel turned the tables in favour of Oudea, who became chief executive at the age of 44.

2009-2012 EUROZONE CRISIS

The euro zone debt crisis hit French banks in particular because they were heavily exposed to debt in Greece and other countries at the periphery of the euro zone. This triggered speculation, including that the French government could be forced to nationalise lenders.

In 2011, as Greece struggled to cope with debt repayments, jitters swept through Europe over the future of its banks.

France and its lenders were considered vulnerable. A flurry of media reports and speculation, including that Societe Generale even faced collapse, rocked its shares, putting Oudea to his toughest test.

Pressure abated on the industry when Mario Draghi, who was European Central Bank president at the time, pledged to do "whatever it takes" to back the euro.

2015 SALES

Oudea is credited with shoring up the bank's capital base, its weakness after the 2008 crisis, selling some businesses and paring back its Eastern Europe arm.

The sale of the bank's stake in Amundi in a 2015 multi-billion-euro stock-market listing granted Oudea a windfall. He later sold the exchange-traded funds specialist Lyxor to Amundi.

He made Boursorama the top French online bank while cutting branches through a merger with the Credit du Nord network.

Oudea's arguably boldest move was at the start of this year when Societe Generale's car leasing division ALD, which he floated in 2017, signed a 4.9 billion euros deal to buy Dutch rival LeasePlan.

Nonetheless, some remained underwhelmed by Oudea. "Investors felt there was a lack of a clear strategic goal," said Legras.

The risks from trading continued to overshadow the bank. In early 2020, it posted a surprise first-quarter loss after a revenue wipeout at its equity trading division after market volatility caused by the pandemic.

The bank has since overhauled that division.

2018 LIBYA BRIBERY

The bank paid $1.3 billion in penalties for wrongdoing, including bribing Libyan officials, an episode for which Oudea apologised.

Between 2004 and 2009, Socgen paid more than $90 million in bribes through a Libyan broker to secure 14 investments by Libyan state-owned financial institutions, the U.S. Justice Department had said.

2022 RUSSIA DEPARTURE

Last month, Socgen became the first major Western bank to announce its departure from Russia, navigating a highly charged standoff between Russia and the European Union, which has been ratcheting up sanctions in response to Moscow's invasion of Ukraine on Feb. 24.

Socgen announced it would sell its Rosbank business to Interros Capital, a company linked to Russian oligarch Vladimir Potanin, writing off roughly 3.1 billion euros.

© Reuters. FILE PHOTO: French bank Societe Generale Chief Executive Officer Frederic Oudea attends a news conference to present the company's 2015 annual results La Defense near Paris, France, February 11, 2016.    REUTERS/Benoit Tessier//File Photo

Socgen was one of a handful of European banks with a significant presence in Russia and the sale was seen as a coup by investors despite the heavy cost because it drew a line under its involvement with Russia.

($1 = 0.9508 euros)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.