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SocGen CEO Oudea surprises banking world with decision to step down next year

Stock Markets May 17, 2022 04:00PM ET
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© Reuters. FILE PHOTO: Societe Generale's Chief Executive Officer Frederic Oudea attends the Euronext stock exchange's annual conference in Paris, France January 14, 2020. REUTERS/Benoit Tessier

By Dominique Vidalon and Matthieu Protard

PARIS (Reuters) -Societe Generale Chief Executive Frederic Oudea in a surprise move on Tuesday said he would step down next year, bringing to an end what will be a 15-year reign running the lender.

France's third-biggest listed bank said it would launch the process of finding a successor for Oudea, who has been CEO since 2008, and should be finished by 2023.

"It is a decision I took with humility, lots of emotion but also with a serene mind," said Oudea, whose last major job was to broker an orderly exit from Russia through the sale of the company's local unit to an oligarch close to the Kremlin.

Oudea is one of the longest serving CEOs in European banking since the financial crisis, while rivals have been through multiple changes of leadership as the industry has struggled to restore profitability. As with many other European banks, however, SocGen's shares have more than halved since the 2008 crisis.

Under Oudea's leadership SocGen has streamlined operations in recent years to boost returns and financial solvency, notably by selling businesses in Central and Eastern Europe and refocusing its corporate and investment banking.

"While this is a surprise, the news makes sense to us," said Jefferies analyst Flora Bocahut in a note, calling it "understandable" for the bank and its boss to draw a line after 15 years.

"Also, we find the timing is right with SocGen's P&L performance having significantly recovered from the recent lows, capital being sufficient, the 2025 strategy clear & in motion". Bocahut added.

A graduate of elite French schools Ecole Polytechnique and ENA, Oudea joined Societe Generale (OTC:SCGLY) in 1995.

He became finance chief in January 2003 before taking over as CEO in 2008 in the wake of huge losses on equity derivatives caused by rogue trader Jerome Kerviel.

Oudea then became chairman and CEO until 2015 when the function was split.

The French bank had a strong start to 2022, reporting a profit rebound for the fourth quarter of last year on lower pandemic-related charges and a retail banking and equity trading rebound, and said it expected to improve profitability in coming years.

Russia's invasion of the Ukraine, however, has created uncertainty for SocGen and other European banks, and has reduced its capital cushion.

This month, the bank beat first-quarter earnings expectations but booked higher provisions for loans turning bad as the economic impact of the war hit customers.

The bank said in April it would quit Russia and sell its Rosbank business there to Interros Capital, a company linked to Russian oligarch Vladimir Potanin, writing off roughly 3.1 billion euros ($3.3 billion).

($1 = 0.9486 euro)

SocGen CEO Oudea surprises banking world with decision to step down next year
 

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