Société Générale is merging its two domestic retail bank networks, closing 600 branches and cutting €450m in costs, as the French lender looks to capitalise on changes in consumer behaviour wrought by the pandemic.
The French lender said on Monday that it would combine its main retail bank network with that of its subsidiary, Crédit du Nord, in an effort to trim its cost base by about €350m by 2024 and €450m by 2025.
Its revamped retail network will boast about 1,500 branches by the end of 2025 — down from 2,100 today — as SocGen joins European rivals in wringing savings from a costly branch network that customers are migrating from.
Lockdowns to slow the spread of Covid-19, as well as the reluctance of many to head outside during the pandemic, has accelerated a move to digital banking, making executives more confident they can shrink branch networks.
SocGen has had a testing year, marked by losses at its equity trading unit. Its second-quarter loss of €1.26bn — its worst since that tied to rogue trader Jérôme Kerviel in 2008 — had heaped pressure on chief executive Frédéric Oudéa, the longest-serving boss of any large European bank.
SocGen’s new bank branch network has a combined 10m customers, and savings will also be eked out by combining IT systems and investments. The bank did not say how many jobs would be lost.
SocGen had already started cutting its networks — a difficult process in France, which remains heavily unionised and where big mutual groups can afford to keep large numbers of branches open. It has closed 390 of the 2,186 branches it had at the end of 2015.
However, despite shutting almost 2,500 branches over the past decade, France overtook Spain last year as the major European market with the highest number of branches per capita, according to an analysis by consultant McKinsey for the Financial Times.
The flip side of its decision to close branches is a push to build up its digital banking offer, Boursorama.
SocGen said on Monday that its online bank was targeting 4.5m customers by 2025, up from 2.5m in 2020. After an “accelerated” push to win customers through 2023, which will lead to a cumulative loss of about €230m over the period, Boursorama would target net income of about €100m in 2024 and about €200m in 2025.
“In a changing French market undergoing several developments accelerated by the Covid crisis, we are today confirming our ambition to differentiate the group by building a unique French retail banking model based on two strong and complementary pillars,” said Mr Oudéa in a statement.
Closing the branches will cost as much as €800m, most of which will be booked next year, SocGen added.