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Analysis of the development strategy of Societe Generale in Europe

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  1. The European banking market.
  2. The development strategy of société générale in Europe.
    1. In detail banking, the central and eastern European choice.
    2. Czech Republic: Komercni Banca (bought in 2001).
    3. Slovenia.
    4. Romania.
    5. Bulgaria :SG Expressbank (1999).
    6. Greece: general bank of Greece (bought in 2004).
    7. Serbia and Montenegro:SG Yugoslav bank.
    8. Croatia.
    9. Russia :SG Vostok (2003).
  3. In Western Europe, societe generale focus on specialized financial services
    1. Household financial services.
  4. Conclusion
  5. References

Achieving an integrated market for banks and financial conglomerates is a core component of the European policy in the area of financial services. Even if the banking market seems to remains mainly national, the free movement of capital, the adoption of the euro and the progressive harmonization of rules impel banks to achieve a critical size not only in their domestic market but also at the European level. If this expected movement of consolidation was actually limited until 2003, the realization of major M&As since 2004, permitted by Europe's economic recovery, tends to prove that consolidation has now really begun. While some banks like BNP-Paribas decided to take up the challenge of achieving a European critical size, Société Générale still prefers standing alone, developing a strong organic growth and making only very targeted acquisitions. After having analyzed the banking consolidation in Europe, we will focus on the development strategy of Société Générale and in particular on the difference between its detail banking and financial services international strategies. Finally, we will conclude about the risk of Société Générale's ?standing alone? strategy in the long run.

[...] The development strategy of Société Générale in Europe After its failures to merge with CIC, BNP and finally Paribas in the late 1990's, Société Générale has adopted the strategy of standing alone since 2000. Instead of trying to achieve a critical size, the firm has preferred to focus on profitability. While its main French rivals, BNP- Paribas and CA, realized major M&As, Société Générale has chosen organic growth and smaller acquisitions in developing countries. It has targeted high-growth geographical regions and businesses. [...]

[...] An internal and external growth strategy supported by synergies within the Group, by a wider product offering and by the development of alternative distribution channels, has enabled Société Générale's international retail banking to continue expanding its business activities efficiently in this zone despite the entry of many Western European banks. It has 3,527,000 individual customers and 919 branches in seven Central and Eastern European states. Czech Republic: Komercni Banka (bought in 2001) Balance sheet (EUR 17,100 Mkt share loans (individuals) Mkt share deposits (ind.) Branches 364 With 1.5 million of individual customers, Société Générale is the second largest detail bank in Czech Republic which represents its first market outside of France. [...]

[...] Conclusion: Société Générale's strategy of strong organic growth combined with targeted acquisitions in high potential countries or/and in very specialized businesses has been successful since Société Générale is now one of the most profitable banks in Europe: while it was the 22e bank in Europe in 1999 with a capitalization of 14 billion of euros, it is now the 10th and its capitalization reaches 52 billion of euros. Nevertheless, there are big interrogations about the suitability of its isolationist strategy in the long run in the context of consolidation. [...]

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