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Societe Generale shares are no longer among the preferences of investors since the financial crisis of 2008-2009. Despite the new management and a digital business model, the French bank is struggling to regain investor confidence and return to pre-crisis levels.
Due to past mistakes, European banks are facing increasingly stringent regulations. This prevents them from competing with US banks and meeting the challenges of this evolving industry.
Societe Generale was founded on May 4, 1864 by Paulin Talabot and the Rothschild family. After setting the standards for the collection of deposits, at the end of the 19th century, it developed its lending and investment activity. The bank benefited from post-war efforts to establish its leading position in France and to expand abroad.
The French bank took advantage of the banking regulations of the 1960s, which placed retail banking and investment banking in the same basket, which favored the expansion of lending.
Between 1970 and 1980, the development of credit card and the advent of ATMs increased the company's growth. In July 1987 Societe Generale was one of the companies affected by the privatization program.
Societe Generale resumed its growth process due to the relaunch of the real estate market in 1990 and 2000. The company's shares were suspended from trading on the Paris Stock Exchange, immediately after trader Jérôme Kerviel lost 4.9 billion euros in the futures market. The media impact of this scandal was unprecedented.
What was previously inconceivable has become possible: a bank could go bankrupt. This has caused problems among depositors. Fortunately, the French government came to the aid to calm the waters. But, on the other hand, we will see later that the price of Societe Generale shares is still recovering after that hard blow.
In 2010, Societe Generale refocused its activities by selling non-strategic assets. It has withdrawn from several countries, and its strategy to expand digital services has begun to take shape with the acquisition of online banking Boursorama and Fintech Treezor.
Societe Generale Aczioni - Business Model
Like the big French banks, Societe Generale is based on a universal model. The company carries out retail banking, investment banking and asset management activities through subsidiaries.
▷ Banking retail services with entities such as Societe Generale, Boursorama and Crédit du Nord
▷ Investment banking services with SG CIB, SGSS, GBIS
▷ Asset management with Lyxor AM, Cholet Dupont
Societe Generale also diversifies its activities in the insurance sector (Sogécap, Antarius, Sogessur), the rental and management of car fleets and the financing of equipment.
General Company Shares - Key Data
1864: The founding of Societe Generale by Paulin Talabot and the Rothschild family
1894: Development of lending activity
1966-1967: attenuation of the distinction between bank deposits and investments. It will accelerate the universal model of French banks.
July 29, 1987: Privatization of Societe Generale.
1997: Acquisition of Crédit du Nord to strengthen its retail banking network
2008: The case of Jerome Kerviel, which provoked a wave of anger among the public
2010: Sale of assets in non-strategic countries (Greece, Egypt, Belarus, Singapore, Croatia, Georgia ...)
June 2014: Acquisition of Boursorama
June 2017: IPO of its subsidiary ALD Automotive
December 2017: Societe Generale agrees to cease financing shale oil activities.
September 2018: Acquisition of Fintech Treezor
General Company Shares - Shareholders
The shareholder structure of the Societe Generale Group as of December 31, 2019 is characterized by three shareholders holding more than 1.5% of the rights. These are Blackrock, The Capital Group Companies and Caisse des Dépôts et Consignation respectively with 6.54, 2.04 and 2.41% of the capital.
The rest is distributed among institutional funds such as Vanguard Group, Lyxor Asset Management, Amundi Asset Management or BNP Paribas Asset Management. Their share is between 1 and 2.5%.
Societe Generale Shares - Dividend and Yield
One of the few positive points of Societe Generale is undoubtedly that it pays dividends. The French bank did not change the level of dividend yield in 2011. However, the value of dividends does not exceed the levels before the sub-prime financial crisis. With the decrease of the share price in recent years, the yield of Societe Generale shares was on average 5.45% in the period 2015-2019.
Morningstar.com source:
Dividend 2015: EUR 1.2
Dividend 2016: EUR 2
Dividend 2017: 2.2 EUR
Dividend 2018: 2.2 EUR
Dividend 2019: 2.2 EUR
2020 dividend: € 0 (following the coronavirus crisis)
In 2020, Societe Generale has decided to stop paying dividends for 2019 following the coronavirus crisis and the ECB's recommendation. However, it does not rule out payment in October if the economic environment improves.
Societe Generale Actions: European Banking Conflicts
The European banking sector has failed to recover from the end of the subprime crisis. It is not helped by the ECB's monetary policy. During his tenure, Mario Draghi introduced low interest rates to avoid widening the spread between the German Bund and the Italian BTP, and then set negative rates on bank deposits to encourage European banks to lend.
European banks are not helped by regulations that require the consolidation of their own funds and, as a result, they claim that this limits their ability to operate in the best possible conditions.
Return on equity is low. In addition, the results are unfavorable compared to the North American banking sector, as the latter benefits from a relaxed regulatory framework by Donald Trump and interest rate hikes by the EDF over the period 2015-2018.
Retail banking, which accounts for a significant share of its revenue, is under attack on all fronts. On the one hand, users receive less and less from agencies. As a significant cost to their business model, banks will be lagging behind in tackling the challenges of digital transformation. On the other hand, banks are facing competition from fintechs and probably GAFAs in the future.
Societe Generale Shares: Risks and Investment Opportunities
The price of Societe Generale shares for a period of more than 5 years does not encourage enthusiasm. The French bank's forecasts are likely to be lowered by financial analysts. In fact, on May 14, 2020, it reached an all-time low of about 11 euros per share.
The results obtained are clearly negative to take into account long-term investments. These are reduced compared to its net assets, but the reduction is justified by the weak intrinsic results.
Should you invest in Societe Generale shares? As brokers are not allowed to provide advice or opinions on technical analysis or fundamental analysis of Societe Generale shares, it is the trader's responsibility to properly analyze price developments before making an investment decision.
The elimination of dividends, the exceptional losses caused by derivative financial instruments in the first quarter of 2020, low interest rates and the cost of the digital transformation are not positive catalysts for the French bank. This confirms the structural problems in the banking sector that have existed for more than a decade.
Due to past mistakes, European banks are facing increasingly stringent regulations. This prevents them from competing with US banks and meeting the challenges of this evolving industry.
Societe Generale was founded on May 4, 1864 by Paulin Talabot and the Rothschild family. After setting the standards for the collection of deposits, at the end of the 19th century, it developed its lending and investment activity. The bank benefited from post-war efforts to establish its leading position in France and to expand abroad.
The French bank took advantage of the banking regulations of the 1960s, which placed retail banking and investment banking in the same basket, which favored the expansion of lending.
Between 1970 and 1980, the development of credit card and the advent of ATMs increased the company's growth. In July 1987 Societe Generale was one of the companies affected by the privatization program.
Societe Generale resumed its growth process due to the relaunch of the real estate market in 1990 and 2000. The company's shares were suspended from trading on the Paris Stock Exchange, immediately after trader Jérôme Kerviel lost 4.9 billion euros in the futures market. The media impact of this scandal was unprecedented.
What was previously inconceivable has become possible: a bank could go bankrupt. This has caused problems among depositors. Fortunately, the French government came to the aid to calm the waters. But, on the other hand, we will see later that the price of Societe Generale shares is still recovering after that hard blow.
In 2010, Societe Generale refocused its activities by selling non-strategic assets. It has withdrawn from several countries, and its strategy to expand digital services has begun to take shape with the acquisition of online banking Boursorama and Fintech Treezor.
Societe Generale Aczioni - Business Model
Like the big French banks, Societe Generale is based on a universal model. The company carries out retail banking, investment banking and asset management activities through subsidiaries.
▷ Banking retail services with entities such as Societe Generale, Boursorama and Crédit du Nord
▷ Investment banking services with SG CIB, SGSS, GBIS
▷ Asset management with Lyxor AM, Cholet Dupont
Societe Generale also diversifies its activities in the insurance sector (Sogécap, Antarius, Sogessur), the rental and management of car fleets and the financing of equipment.
General Company Shares - Key Data
1864: The founding of Societe Generale by Paulin Talabot and the Rothschild family 1894: Development of lending activity 1966-1967: attenuation of the distinction between bank deposits and investments. It will accelerate the universal model of French banks. July 29, 1987: Privatization of Societe Generale. 1997: Acquisition of Crédit du Nord to strengthen its retail banking network 2008: The case of Jerome Kerviel, which provoked a wave of anger among the public 2010: Sale of assets in non-strategic countries (Greece, Egypt, Belarus, Singapore, Croatia, Georgia ...) June 2014: Acquisition of Boursorama June 2017: IPO of its subsidiary ALD Automotive December 2017: Societe Generale agrees to cease financing shale oil activities. September 2018: Acquisition of Fintech TreezorGeneral Company Shares - Shareholders
The shareholder structure of the Societe Generale Group as of December 31, 2019 is characterized by three shareholders holding more than 1.5% of the rights. These are Blackrock, The Capital Group Companies and Caisse des Dépôts et Consignation respectively with 6.54, 2.04 and 2.41% of the capital.
The rest is distributed among institutional funds such as Vanguard Group, Lyxor Asset Management, Amundi Asset Management or BNP Paribas Asset Management. Their share is between 1 and 2.5%.
Societe Generale Shares - Dividend and Yield
One of the few positive points of Societe Generale is undoubtedly that it pays dividends. The French bank did not change the level of dividend yield in 2011. However, the value of dividends does not exceed the levels before the sub-prime financial crisis. With the decrease of the share price in recent years, the yield of Societe Generale shares was on average 5.45% in the period 2015-2019.
Morningstar.com source:
Dividend 2015: EUR 1.2
Dividend 2016: EUR 2
Dividend 2017: 2.2 EUR
Dividend 2018: 2.2 EUR
Dividend 2019: 2.2 EUR
2020 dividend: € 0 (following the coronavirus crisis)
In 2020, Societe Generale has decided to stop paying dividends for 2019 following the coronavirus crisis and the ECB's recommendation. However, it does not rule out payment in October if the economic environment improves.
Societe Generale Actions: European Banking Conflicts
The European banking sector has failed to recover from the end of the subprime crisis. It is not helped by the ECB's monetary policy. During his tenure, Mario Draghi introduced low interest rates to avoid widening the spread between the German Bund and the Italian BTP, and then set negative rates on bank deposits to encourage European banks to lend.
European banks are not helped by regulations that require the consolidation of their own funds and, as a result, they claim that this limits their ability to operate in the best possible conditions.
Return on equity is low. In addition, the results are unfavorable compared to the North American banking sector, as the latter benefits from a relaxed regulatory framework by Donald Trump and interest rate hikes by the EDF over the period 2015-2018.
Retail banking, which accounts for a significant share of its revenue, is under attack on all fronts. On the one hand, users receive less and less from agencies. As a significant cost to their business model, banks will be lagging behind in tackling the challenges of digital transformation. On the other hand, banks are facing competition from fintechs and probably GAFAs in the future.
Societe Generale Shares: Risks and Investment Opportunities
The price of Societe Generale shares for a period of more than 5 years does not encourage enthusiasm. The French bank's forecasts are likely to be lowered by financial analysts. In fact, on May 14, 2020, it reached an all-time low of about 11 euros per share.
The results obtained are clearly negative to take into account long-term investments. These are reduced compared to its net assets, but the reduction is justified by the weak intrinsic results.
Should you invest in Societe Generale shares? As brokers are not allowed to provide advice or opinions on technical analysis or fundamental analysis of Societe Generale shares, it is the trader's responsibility to properly analyze price developments before making an investment decision.
The elimination of dividends, the exceptional losses caused by derivative financial instruments in the first quarter of 2020, low interest rates and the cost of the digital transformation are not positive catalysts for the French bank. This confirms the structural problems in the banking sector that have existed for more than a decade.
