Societe Generale. France’s third-biggest listed bank, and US investment management company Alliance Bernstein plan to form a joint venture focusing on global cash equities and equity research.
SocGen said it plans to take a 51% interest in the venture, with an option to take 100% ownership after five years.
It added that the business would be run as a long-term partnership under the Bernstein name, headquartered in London.
Once completed, Robert van Brugge, CEO of Bernstein research services, would become CEO of the new entity for an initial term of five years, while Stephane Loiseau, head of Societe Generale’s cash equities business, would become deputy CEO.
The new partnership comes at a time when Societe Generale is ramping up efforts to better compete with bigger and more profitable rivals such as BNP Paribas in France and leading Wall Street banks Goldman Sachs and JP Morgan.
The French bank said the alliance is aligned with its investment banking strategy. It brings further diversification, both from a geographical perspective and nature of revenues, being fee-based with a low risk profile.
The combined research and execution capabilities would help deepen engagement with clients, widen the franchise and gain market share overall.
The deal is expected to close before the end of 2023 and the business would boost its profit from 2025 onwards according to the bank.
At Societe Generale group’s level, it said this step-change towards creating a global leading equity house would be accretive from 2025, and at target would generate a profitability (ROTE) uplift between +15 and +20 basis points.
It added the expected impact on CET1 ratio, which is already factored in the Group’s 2025 trajectory presented during Societe Generale’s Q2 22 financial results, would be limited to around 10 basis points at closing.
“This partnership with one of the most recognized firms in research and cash equities, combined with our global leadership in equity derivatives, would create an undisputed leader across the equity business for the benefit of our issuer and investor clients,” said Slawomir Krupa, head of global banking and investor solutions, Societe Generale.
“In Societe Generale, we have a strategic partner who is committed to strengthening and growing our world-class cash equities and research business,” said Seth Bernstein, AllianceBernstein’s President and CEO.
Van Brugge said that “this partnership gives us the opportunity to participate in the high added value segments of the global equities business,” while Loiseau added, “Importantly, it would also allow us to preserve and expand our firms’ unique strengths, expertise, and cultures.”
