CEO Oudéa to leave SocGen free of Russia ties after 15-year term

Société Générale SA CEO Fréderic Oudéa will step down next year after a tenure that has seen the bank navigate rogue trader fallout, sell its large Russia business and bolster capital levels.

Oudéa said May 17 that he will not renew his current term when it expires after the French banking group's annual general meeting on May 23, 2023, 15 years after assuming the role in May 2008. Oudéa is the longest-serving CEO of any major European bank.

SocGen's shares closed at €23.98 on May 18, down more than 65% from €70.99 on April 17, 2008, when Oudéa was named CEO of the group, S&P Global Market Intelligence data shows. This includes a precipitous drop during the global financial crisis; the STOXX Europe 600 Banks index fell roughly 63% during the same period. Shares of domestic peers Crédit Agricole SA and BNP Paribas SA declined by roughly 42% and 21%, respectively, in the period.

SocGen has faced a number of turbulent events during Oudéa's term, including the aftermath of a scandal involving former trader Jérôme Kerviel, whose unauthorized equity derivative trades cost the lender €4.9 billion. The bank also had to deal with settlement of legal cases in the U.S. and France as well as losses due to the economic impact of the COVID-19 pandemic during Oudéa's term of office.

Russia's invasion of Ukraine is also affecting the lender. SocGen recently sold its Russian unit PJSC Rosbank and insurance businesses in the country, and it expects to book a roughly €3.2 billion net loss on its second-quarter financial statements due to the transaction. The bank's exit from Russia came amid pressure on international companies to cut ties with the country, which faces increasing sanctions.

Improved capitalization

SocGen's common equity Tier 1 ratio — a measure of financial strength — has also improved during Oudéa's tenure. It stood at 13.71% at 2021-end, more than double the 6.60% at year-end 2008, as regulators pushed banks to bolster capital after the financial crisis.

Oudéa entered deals that resulted in capital gains for the bank, such as the sale of its asset management activities operated by Lyxor to Amundi SA. Some of the other key deals under his belt include the bank's €4.9 billion acquisition of Dutch car leasing company LeasePlan Corporation NV.

SocGen swung to a group net income of €5.64 billion in 2021 from a prior-year loss of €258 million. The bank said during a February earnings call that these were the "best financial results in its history."

For the first quarter of 2022, the group's net income rose 3.4% year over year to €842 million. This was despite the bank booking a significant year-over-year increase in cost of risk — the main metric for following loan loss provisioning efforts — to €561 million from €276 million, largely due to the impact of the Russia-Ukraine war.

Corporate and investment banking head Slawomir Krupa, domestic retail operations boss Sébastien Proto and deputy CEOs Philippe Aymerich and Diony Lebot are among internal executives who could be considered as Oudéa's successor, Bloomberg noted. Former UniCredit SpA CEO Jean Pierre Mustier has also been mentioned as a potential successor, according to the Financial Times (London).