SocGen puts Nordics leasing business on the block - sources

Credit: REUTERS/Charles Platiau

France's Societe Generale has put its leasing unit in the Nordics up for sale as part of a plan to exit non-strategic businesses and keep capital ratios strong, two sources familiar with the matter told Reuters.

By Maya Nikolaeva and Pamela Barbaglia

PARIS/LONDON, Oct 23 (Reuters) - France's Societe Generale SOGN.PA has put its leasing unit in the Nordics up for sale as part of a plan to exit non-strategic businesses and keep capital ratios strong, two sources familiar with the matter told Reuters.

Investors and analysts are keeping close tabs on Societe Generale's progress in a disposal programme that should help boost its common equity tier one ratio - a key measure of financial strength - by 80-90 basis points.

The unit, known as SG Finans, focuses on equipment finance solutions and has 358 employees overall in Norway, Sweden and Denmark.

Bank of America is leading the sale, one of the sources said.

SocGen's executives believe the business is too isolated and does not provide enough synergies for the group, another source with direct knowledge of the matter said.

SocGen and Bank of America declined to comment.

SG Finans had 38.3 billion Norwegian crowns ($4.19 billion) of assets as of end-2018. Its profit before tax fell to 738 million Norwegian crowns ($80.34 million) in 2018 from 853 million Norwegian crowns a year before.

SocGen, along with other European banks, has to find ways to cope with a negative interest environment that curtails returns for retail activities and with difficult market conditions that hurt investment banking profits.

The French lender is also trying to flip a portfolio of non-performing loans linked to small and mid-sized companies to private equity investors, two sources said.

SocGen has gone through some tough times since the beginning of 2018 when it settled costly legal disputes. Its then head of investment banking left as a result.

Since then, its share price slid to a 7-year low of 21.2 euros per share in June, recovering slightly to 26.4 euros as of 0830 GMT on Wednesday thanks to the bank's efforts to keep capital ratios on track with its targets.

The European banking index .SX7P is down by 2.8% in the past year, outperforming SocGen's share price, which has fallen more than 20% in that period.

SocGen is to report third-quarter results on Nov. 6.

($1 = 9.1855 Norwegian crowns)

($1 = 0.8998 euros)

($1 = 9.1463 Norwegian crowns)

(Reporting by Maya Nikolaeva in Paris and Pamela Barbaglia in London; Editing by Alexandra Hudson)

((maya.nikolaeva@thomsonreuters.com; +33 1 49 49 53 39;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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