By Mathieu Rosemain
PARIS (Reuters) – Slawomir Krupa has one clear mission when he takes over at Societe Generale on Tuesday: remake France’s third-largest lender as a top-tier bank with a distinct identity.
The 48-year-old, who has spent his whole career at SocGen, must perform a tricky balancing act, improving returns for shareholders without taking undue risk against a shaky backdrop for bank stocks.
“It’s very important to clarify (things), where necessary, to all stakeholders and say: That’s what Societe Generale is,” Krupa, who most recently headed SocGen’s investment bank, told Reuters in an interview. He is due to lay out his plans for the bank by the autumn.
After a tumultuous 15 years under his predecessor, Frederic Oudea, who merged units, sold businesses – including a costly Russia exit – and cut risk-taking, the bank’s stock price is trading at just 30% of the book value of its business.
As a yardstick of investor support, that puts it on a par with Deutsche Bank but far behind its bigger French rival BNP Paribas and at the bottom end of European lenders.
Societe Generale’s vulnerability was made clear earlier this year when its stock was among the hardest hit as investors sought safety following the collapses of Silicon Valley Bank and Credit Suisse. Those who appointed Krupa hope he can lead the bank out of this danger zone.
A person familiar with the decision by SocGen’s board to appoint him as CEO said the top priority is to improve efficiency within the bank’s current structure, as Krupa did after taking over the investment bank in early 2021.
This could include seeking to squeeze more out of other parts of the business to reduce what is seen as too high an exposure to riskier investment banking.
In his previous role Krupa cut costs and addressed trading risks, said that person, who is familiar with the SocGen’s board thinking, paving the way for a turnaround of the division.
Two years on, SocGen’s investment bank recorded the largest annual growth in pre-tax profit among the three French listed banks, cementing it as the group’s main profit driver.
BREAK WITH TRADITION
Krupa’s reputation as a problem-solver helped make his case for the top job when he appeared before SocGen’s independent directors in September, people familiar with the process said.
Despite his 26 years at the bank, he was also viewed as something of an outsider, because unlike SocGen CEOs stretching back a century he has not previously been in the senior ranks of France’s public administration.
The board favoured a break with tradition, said one of the people. Born in Communist Bulgaria in 1974, Krupa’s family emigrated from Poland to France when he was six.
His hard-driving style is also seen as a contrast to Oudea’s.
“Slawomir has … a way of moving forward, of taking people with him. Frederic (Oudea) is more collegial,” said Jean-Pierre Mustier, the former UniCredit CEO and former head of SocGen’s investment bank who made Krupa his chief of staff in 2007.
A self-described straight-talker, Krupa can be impatient and demanding, a former top executive at SocGen said.
Others say that bluntness is a strength. One of SocGen’s top corporate clients, who has met Krupa on several occasions, told Reuters he was not part of a French establishment where nobody wants to say no.
Krupa faces challenges from the outset. Some investment bankers suggest that ultimately the group could be combined with a European rival.
One, asking not to be named, said such a move would benefit SocGen because it was a “mid-size player” dwarfed by U.S. rivals and domestic giant BNP Paribas.
That view is echoed by Jean Dermine, a professor at business school INSEAD. “How to improve profitability without mergers? I don’t see how it is possible at all,” he said.
For now, Krupa is focused on operational questions, such as finalising a joint venture with investment management company AllianceBernstein for global cash equities and equity research. That may offer a platform to grow in the United States.
But Krupa said a big merger is not on the cards in the near term.
“Strategically, does Europe need stronger banks? The answer is yes, but I don’t think that’s really on the agenda at this stage,” he told Reuters.
(Reporting by Mathieu Rosemain; Editing by Elisa Martinuzzi and Catherine Evans)