Societe Generale focuses on development

Despite the world economic credit crisis, Societe Generale's development strategy in China's market will not change in the longer term, according to Jackson Cheung, chief executive officer of Societe Generale(SG) (China) Limited.

"At a time when uncertainties are hanging over the global financial markets and the impact has started to spread to the real economy, China is not immune to the global economic downturn. But we are quite confident about China's longer-term growth and will not change our long term development strategy in China's market," Cheung told China Daily.

Cheung said that since SG first entered China in 1981, when it started to benefit from China's major development in the financial industry, the bank will introduce to China a universal banking model to the country's financial services.

"A good business balance is very important for the development of a bank," said Cheung, adding that SG has balanced its various businesses, including corporate and investment business, retail and commercial financing businesses and asset management services.

"In addition, we have also developed a good balance between debt and deposits, between developed markets and emerging markets," Cheung added.

The group is financially solid with a tier1 ratio at 8.2 percent as of the end of June 2008. The group's credit rating is AA- by S&P and Fitch, and Aa2 by Moody's, rated among the top financial services groups in the euro zone.

Credit Default Swaps (CDS), which can be used as an insurance against the risk of default of an institution, generally illustrate the market confidence in the financial situation of major institutions. SG's 5-year CDS is one of the tightest spreads in the industry, indicating market confidence in its financial strength.

During the past 28 years of development in China, SG has maintained growth by opening branches in several of the largest cities in China, including Beijing, Shanghai, Tianjin, Guangzhou and Wuhan. Obtaining a local incorporation entity in August has enabled it to further expand its penetration in China's market.

Established in Beijing in 1981, SG China was one of the first batch of international banks operating in China. From the very beginning of development in China, the bank's corporate and investment banking business accounted for an overwhelming proportion of its overall business in China.

So far, its corporate and investment business has created an extensive network covering the growing regions of China, from the eastern costal cities to central areas. SG will start strongly in retail banking and consumer banking services and private banking shortly.

Leveraging its global strength on derivatives, structured finance and capital markets, the bank brings value to both domestic and international clients on the mainland through its solution-driven approach.

Cheung also predicted that other new businesses, including retail banking and private banking services, will be playing an increasing important role in the future development of the bank.

Other than SG China Inc, SG also provides other services such as fund management services through SG Fortune SGAM, equipment leasing and car leasing services through SGEF and so on. Fortune SGAM Fund Management Co is the first joint venture fund management company between Societe Generale and a local partner, Baosteel, the country's largest steelmaker.

The company was also among the first joint venture fund management companies established in China. Since 2003, a total of 12 funds under the operation of Fortune SGAM Fund Management Co have performed well and won popularity among investors.

SG has also introduced its insurance business to China's market. In January 2007, SG Insurance established a life insurance representative office in Beijing in the hope of launching a wide range of insurance products in the near future.

According to Cheung, SG is set to open 50 to 60 more branches in China in the coming five years.

"We are going to expand our outlets not only to major largest cities but also to the second tier-cities according to the approval schedule given by regulators," Cheung said.

Societe Generale China received final approval for local incorporation from the China Banking Regulatory Commission to set up a wholly foreign owned bank in China in August 2008. The new entity is named Societe Generale (China) Limited and is fully owned by its parent, Societe Generale Group.

Meanwhile, the bank's business performances were overall satisfactory in a volatile market environment, with the group confirming a capital adequate ratio of 8 percent as of September 2008, in line with its objectives for the full year.

(China Daily 10/24/2008 page41)