France Societe Generale (SocGen) today accelerated plans to increase profits by combining its two retail banking networks, resulting in the closure of 600 of its nearly 2,100 branches by 2025.
As a result of low interest rates continuing to burden lending income and retail banking margins, France's third largest lending operator revealed that the merger of the two networks would save more than 350 million euros in 2024 and nearly 450 million euros in 2025.
In addition, the plan will involve spending between € 700 million to € 800 million.
Following the announcement, SocGen shares recorded a decline of 1.2%.
While loan operators in Europe are said to have reduced their branches over the years, opposition from unions and politicians over banking access has made the plan unworkable.
The number of bank branches in the European Union is rumored to have dropped from about 238,000 in 2008 to 174,000 by the end of 2018.
In addition, Deutsche Bank and Commerzbank in Germany also announced significant cuts in their branch network this year, with Deutsche Bank closing about one-fifth of its total branches.
As a result of the outbreak of the Covid-19 epidemic, SocGen has accelerated its transition to online banking across Europe, as well as undertaking efforts to strengthen its operations known as Boursorama.
Through its online medium, Boursorama is targeting 4.5 million customers by 2025, up from 2.5 million this year. In addition, it is expected to record a cumulative loss of around € 230 million in 2023 with a net income of € 100 million that year, increasing to € 200 million in 2025.
As part of the profit initiative, chief executive Frederic Oudea put the SocGen equity and credit structured products business in review this year after overall operations faced conflicts as a result of market volatility and dividend cancellations following the Covid-19 crisis.
In recent years the bank has also moved out of the underserved districts, selling units and activities in eastern and central European countries such as Poland, Bulgaria, and Albania.
In addition, they are rumored to be planning to sell its asset management branch Lyxor. However, SocGen does not want to submit any feedback on the matter.
