On Tuesday, Slawomir Krupa will take over Societe Generale (SOGN.PA) and transform France’s third-largest lender into a top-tier bank with a distinct character.
The 48-year-old, who has spent his entire career at SocGen, must balance shareholder rewards with risk in a volatile bank stock market.
“It’s very important to clarify (things), where necessary, to all stakeholders and say: That’s what Societe Generale is,” Krupa told Reuters. He will present his financial intentions in October.
After a difficult 15 years under his predecessor, Frederic Oudea, who consolidated units, liquidated operations (including a costly Russia exit), and curbed risk-taking, the bank’s stock price is trading at 30% of its book value.
That puts it on par with Deutsche Bank but considerably behind BNP Paribas and the bottom of European banks in investor backing.
The bankruptcies of Silicon Valley Bank and Credit Suisse showed Societe Generale’s fragility earlier this year. Krupa’s appointees think he can save the bank.
After taking over the investment bank in early 2021, Krupa prioritized improving the firm’s efficiency, according to a source familiar with SocGen’s board’s decision to make him CEO.
To limit risky investment banking exposure, this might mean squeezing other aspects of the organization.
That individual, acquainted with SocGen’s board thinking, said Krupa slashed expenses and trading risks in his prior post, enabling the division’s revival.
Two years later, SocGen’s investment bank had the highest pre-tax profit growth among the three French listed banks, making it the group’s principal profit engine.
Break tradition
In September, SocGen’s independent directors were impressed by Krupa’s problem-solving skills.
Unlike SocGen CEOs from a century before, he had never worked in France’s public administration, making him an outsider despite his 26 years at the bank.
One person stated the board favored breaking tradition. Krupa’s family moved from Poland to France when he was six.
His hard-driving approach contrasts Oudea’s.
“Slawomir moves forward, taking people with him.” “Frederic (Oudea) is more collegial,” said Jean-Pierre Mustier, former UniCredit CEO and head of SocGen’s investment bank, who appointed Krupa his chief of staff in 2007.
An ex-SocGen executive said Krupa is impatient and demanding.
Some feel bluntness is a strength. One of SocGen’s top corporate clients, who has met Krupa numerous times, told Reuters he wasn’t part of a French establishment that doesn’t say no.
Krupa starts with obstacles. Investment bankers recommend merging the firm with a European rival.
One unnamed source suggested SocGen, a “mid-size player” overshadowed by U.S. competitors and domestic heavyweight BNP Paribas, would gain from such a move.
INSEAD professor Jean Dermine agrees. How to increase profitability without mergers? “No way,” he responded.
Krupa is finishing a joint venture with AllianceBernstein (AB.N) for global cash equities and equity research. That may allow US growth.
Krupa suggested a large merger is unlikely.
Does Europe need stronger banks strategically? “Yes, but I don’t think that’s really on the agenda,” he told Reuters.
