Société Générale
Société Générale S.A., colloquially known in English-speaking countries as SocGen, is a French multinational universal bank and financial services company founded in 1864. It is registered in downtown Paris and headquartered nearby in La Défense.
Société Générale is France's third largest bank by total assets after BNP Paribas and Crédit Agricole. It is also the sixth largest bank in Europe and the world's eighteenth. It is considered to be a systemically important bank by the Financial Stability Board. It has been designated as a Significant Institution since the entry into force of European Banking Supervision in late 2014, and as a consequence is directly supervised by the European Central Bank.
From 1966 to 2003 it was known as one of the Trois Vieilles major French commercial banks, along with Banque Nationale de Paris and Crédit Lyonnais.
History
19th century
The bank was founded by a group of industrialists and financiers during the Second Empire on 4 May 1864. Its full name was Société Générale pour favoriser le développement du commerce et de l'industrie en France. The bank's first chairman was the prominent industrialist Eugène Schneider, followed by Edward Charles Blount. By 1870, the bank had 47 branches throughout France, including 15 in Paris. It set up a permanent office in London in 1871.At the beginning, the bank used its own resources almost entirely for both financial and banking operations. In 1871, Société Générale moved into the public French issues market with a national debenture loan launched to cover the war indemnity stipulated in the Treaty of Frankfurt.
The bank was financially involved with some of the businesses created by Paulin Talabot, the railway and canal engineer. Talabot came to have an influential role in the bank.
In 1886, Société Générale was part of the bank consortium that financed the construction of the Eiffel Tower.
From 1871 to 1893, France went through a period of economic gloom marked by the failure of several banking establishments. The company continued to grow at a more moderate pace. In 1889, there were 148 banking outlets, demonstrating the group's capacity to withstand unfavourable economic conditions.
Starting in 1894, the bank set up the structures characterising a large, modern credit institution. As well as collecting company and private deposits, its branches started to provide short-term operating credits for industrialists and traders. It also moved into placing shares with the general public, issuing private debenture loans in France and also in Russia. Acquisition of equity stakes became a more secondary activity. The company's excellent financial health allowed it to expand its shareholding structure. In 1895, Société Générale had 14,000 shareholders.
In 1898, Société Générale entered the Belgian market. Because the Société Générale de Belgique predated its French namesake and had a dominant position in the national market, Société Générale agreed to create a bank with a different name, the Société Française de Banque et de Dépôts headquartered in Paris but entirely dedicated to operations in Belgium. The bank had its Brussels office from 1898 in the prestigious on Rue Royale, and also maintained a branch in Antwerp, at No.72-76 of Meir.
20th century
On 21 December 1911, the illegalist anarchist Bonnot Gang attacked Ernest Caby, a Société Générale courier responsible for transporting daily funds to the rue Ordener agency in Paris. In search of money, Raymond Callemin and Octave Garnier shot him down, stole the money he was carrying, and then fled with Jules Bonnot in a stolen luxury car. This attack, known as the Ordener attack, was the gang's first robbery and the first motorized bank heist in history.By 1913, Société Générale had 122,000 shareholders. The war years were difficult and had serious consequences with the loss of Russian business. However, during the 1920s Société Générale became France's leading bank: its network had grown sharply since the 1890s, with a huge number of branches and seasonal offices allowing in-depth penetration of the provincial market.The number of sales outlets rose from 1,005 in 1913 to 1,457 in 1933.
Thanks also to the dynamism of supervisory and management staff at head office and in the branch offices it moved ahead of Crédit Lyonnais between 1921 and 1928. To satisfy the requirements of investing companies, Société Générale created a subsidiary, Calif, specialised in medium-term credit in 1928.
On an international level, the bank held an active participation in the Russo-Asian Bank, one of the leading bank of the Russian empire. Société Générale first settled in Russia through the Severnyi bank in 1901, before merging with the Russo-Asian bank in 1910, which held a majority stake in the Chinese Eastern Railway. It also invested in Russian industry including such companies as the Rutchenko Coal Company and the Makeevka Steel Company. Thanks to the connections of Talabot they were also involved in the Krivoi-Rog Iron Company.
The 1930s were another difficult period. Given the decline in international and French business, the bank was forced to nationalise its network by closing down local branches. On the eve of World War II, the number of sales outlets was not much greater than in 1922. However, Société Générale was active in placing numerous public loans launched during this period by the State or the colonies. The war and the German Occupation interrupted its advance, but the bank moved into Africa and the United States.
Société Générale was nationalised in 1945. It now had a single shareholder: the State. The period from 1945 to 1958 was characterised in France by rapid economic recovery but also a greater disequilibrium in the balance of payments, calling for continued exchange controls and virtually permanent credit control measures. It was not until 1959 that the economy really recovered, but credit controls were reinforced due to persistent inflationary pressures. Sharp growth in production and foreign trade opened up new areas of business for the banks.
The industry underwent some quite radical changes, one of the most striking of which was much greater specialisation of credit. The range of banking services on offer expanded uninterruptedly.
Thanks to its presence in New York City, Société Générale was able to take advantage of the flow of business generated by the Marshall Plan.
Société Générale continued to expand in France and beyond. It moved into Italy and Mexico and altered the status of its establishments in Africa after decolonisation, in accordance with the laws passed by these newly independent countries.
From the mid-1960s, Société Générale gave new impetus to its French network, with an acceleration in growth after 1966 following elimination of prior authorisation for opening branch offices. International expansion was just as vigorous. It was no longer limited, as before, to the main financial centres, neighbouring countries and the former colonies, with the primary aim of facilitating the business of French firms, but was also aimed at guaranteeing the bank's presence where new markets were developing, either to export the technical expertise it had acquired in certain fields, or to keep up its contact with the multi-nationals.
1966 and 1967 represented a fundamental turning point in banking regulations, the main development being attenuation of the distinction between deposit and investment banking, and creation of the home mortgage market. Société Générale took advantage of this and acquired leading positions in some new financing techniques designed primarily for companies, such as finance leasing, setting up specialised credit subsidiaries for this purpose.
The 1970s were characterised by two major developments: expansion of the international network and across-the-board introduction of IT facilities to cope with extension of the customer base and the development of deposit money. In 1971, the appearance of automatic cash machines crowned the success and development of the credit card. In 1973, Société Générale opened its representative office in the Soviet Union.
In 1976, during the Bastille Day holiday, a meticulously planned robbery was carried out against Société Générale's most heavily fortified vault in France by ex-paratrooper and wedding photographer Albert Spaggiari. The robbery which involved secretly tunneling underground and compromising the walls of the bank vault netted Spaggiari over 12 million in cash, jewellery, and bullion.
From the beginning of the 1980s, against a backdrop of deregulation and technological change, internationalisation of the markets and the emergence of new financial instruments, Société Générale set itself two commercial objectives. It focused increasingly on private customers via its network of branches and by acquiring specialised subsidiaries. It pursued and expanded its activities in the capital markets in France, and then, on a selective basis, in the different international financial centres.
On 29 July 1987 Société Générale was privatised. It had been chosen from among the three leading French commercial banks nationalised in 1945 for its excellent risk-coverage, equity and productivity ratios. George Soros was a share-holder in 1988.
File:Bank SocGen Luxembourg.jpg|thumb|Société Générale building on Boulevard Royal, Luxembourg City
In 1986, Société Générale created Fimat International Banque S.A., a global brokerage, offering a range of clearing and execution services on listed or OTC derivatives and cash products. In 2005, Fimat completed the acquisition of Cube Financial. In January 2008, it merged with Calyon Financial to form Newedge; in 2014, SG purchased Credit Agricole's stake.
In subsequent years, the Société Générale Group has focused on developing its activities around three core businesses through a combination of organic growth and acquisitions.
In the early 1990s, the Senegalese subsidiary of Société Générale teamed up with the Swiss processed-foods manufacturer Nestlé to illegally dispossess the real estate assets of the Industrial Company of Dairy Products, thus leading the dairy company to bankruptcy.
Retail Banking was strengthened in 1997 through the acquisition of Crédit du Nord, highlighting the Group's determination to capitalise on the restructuring of the French banking system. At the same time, Société Générale looked to secure the long-term loyalty of its customers. In 1999 it entered into a merger agreement with rival bank Paribas, but this was scuppered by a competitor, the Banque Nationale de Paris.
In 1998 Société Générale paid $540 million in cash to acquire Cowen & Company, a New York investment bank that specialized in the health care, technology and communications industries. Cowen was taken over by the Societe Generale Securities Corporation, the French bank's New York investment bank, and renamed the SG Cowen Securities Corporation. Joseph M. Cohen, Cowen's chief executive became its chairman, and Curtis R. Welling, an investment banker from Societe Generale's New York office became president and chief executive.
In 1998, Société Générale set up Retail Banking outside France as a separate division, underscoring the Group's resolve to make this business one of its strategic development axes. This activity was also strengthened in 1999 through the acquisitions made in Romania, Bulgaria and Madagascar.