Then it emboldens to finance daring operations

By Philippe Escande

That is what the France In allowing in 1940 young resistant freshly landed on the ground English, surprisingly all from the island of Sein in Brittany, General de Gaulle had this famous sentence: "But within, it is the France!" In financial matters, no aucun établissement establishment is symbol over a certain State of mind French as Société Générale. By its character of course, eternal blend of elegance, recklessness and arrogance, and by its history also. In almost one hundred and fifty years of existence, Société Générale has married all the ups and downs of history without changing fundamentally nor in its missions, its perimeter, or independence.

It is this independence that Daniel Bouton launched the establishment in the adventure of the Bank of market which cost him so much today. A spectacular fraud in 2008, followed a few months later by the American financial crisis has weakened the company to the point that the question of independence resurfaced. Analysts are already speculating about the name of a buyer and the BNP regularly updates a record of acquisition, developed over the years and sleeping in its coffers.

But the old lady lift between its historical Agency of boulevard Haussmann, architectural tribute to its retail banking business and its futuristic hive of defence, symbol of his conversion to the capital market, saw others. Its history faithfully married mutations in the business of the Bank. And today bears the same stigma, those of an organization always in delay of a revolution.

Through what historian Hubert Bonin (1) calls "the second banking revolution", that of the advent of commercial banks, as Société Générale was introduced on May 4, 1864. Its development is explosive and overcoming the economic difficulties of the end of the 19th century. Its agencies bloom, but it takes late on his competitor, Crédit Lyonnais. Then it emboldens to finance daring operations. Like the Dreyfus broker, which it supports the development in the Peru very carrying guano for European farmers market! Market wrap, the Bank is funding a new port, ready indirectly to the Peru, which enters the war with the Chile... It is sufficient that the market slow, that the client pay more so that the House of cards collapses. Press unleashed, confidence flies and the Bank is found in two fingers of a "rush" of investors, this bane of always banks.

The direction is landed in 1886. Then comes an outstanding Manager, Louis Dorizon, his diagnosis: growth uncontrolled, low skilled, risk not required.

A restructuring of the Bank with three priorities: the centralization of the means to better control too autonomous agencies, recruitment of young and qualified staff, and finally the establishment of a genuine culture of risk with the creation of an elite corps, the General Inspectorate, which is still the pride of the Bank.

Louis Dorizon will fall on a new crisis that still caused by uncontrolled expansion, one which saw the Bank starting in the Belle Epoque to the conquest of Europe from the East and the Russia, which became the first bank. International tensions and a poor assessment of the risks of deployment beyond France will force the Bank to receive first aid of a star of the Bank business, the Bank of Paris and the Netherlands (now Paribas), and in a second time to call in the community of French banks to restore its liquidity.

Prosperous in the 1920s, State in 1946, prisoner of the regulatory straitjacket of the post-war period, the Bank well lived the third banking revolution, that of the Bank of mass for individuals, the book of cheques for all. After its privatization in 1987, it is at the dawn of the fourth, that of globalization, that the adventure started with roughly the same ingredients. In 1999, Société Générale attempts to get their hands on Paribas last jewel available in the area of the business bank. BNP response by a dual OPA on its two competitors and seized Paribas. Therefore, the obsession of the CEO of the time, Daniel button, will be to grow internally to preserve the independence of the Bank. He develops to forced walking activity of bank financing and investment (BFI), including by strengthening the expertise of the institution in derivatives, and launches the company to the conquest of the Eastern countries.

But, as in the Belle Epoque, stewardship has difficulty tracking this unbridled growth. The fraud of Jérôme Kerviel, discovered in January 2008, shows the extent of the security gaps. Autonomy by the activity of the BFI escape the vigilance of the Inspector General. The financial crisis adds a layer of more revealing the extent of the risks taken by the Bank in the US housing market. Thirty-five billion euros of toxic assets are now sleeping in the accounts of the Bank.

As Louis Dorizon in 1886, Frédéric Oudéa, named in 2009, made the choice to strengthen the business without touching its perimeter. In other words, the Société Générale believes still hard as iron in its positioning of universal bank. A triptych in which throne again the bank details in France, which represents a third of its revenues.

The crisis revealed the strength of this pillar, the low growth but high profitability, of the order of 20 of return on own funds. It has still nothing invented better than the simple common that it attracts and keeps the barge to shots of real estate credit and custom services. A side figure still the funding and Investment Bank, assumed in normal times (i.e. or) in 2008 or 2009 draw the profitability of the group, but in more modest version. First with a risk a little more "muscular" and independent organization, but with less ambitious management for own account.

Finally, the third pillar is the retail bank abroad, main engine of growth. With, as in 1910, a Cape on the East and the Russia. Default choice because other large engines emerging, China, Brazil, India, are considered impenetrable, either politically or economically. Finally, in support, are specialized financing and private banking activities to complete to solidify the building.

Therefore, the strategy is being implemented, called "ambition 2015", long-time past. Accelerate the integration of French networks (including the Crédit du Nord et Boursorama), push the fire at the international, strengthen the culture of risk and pooling resources. Computing, which accounts for slightly less than 20 of the costs, will be unified, France as internationally. Nothing good choreographer course for the financial community, awaiting precise figures for June 8. This will be sufficient to guarantee the sacrosanct independence of the General while it already evokes the insufficient size of its activity of BFI and the betting risk the Russia By the own admission of Société Générale, three banking groups emerged strengthened from the crisis: the British HSBC, Santander Spanish and French BNP Paribas. The red and black Bank is not in the losers, the Commerzbank, Royal Bank of Scotland or Dexia, but in the platoon of the medium, that of the convalescent sentenced to move if they want to survive the fourth banking revolution.