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SocGen ready to repay aid

SOCIETE G&eacute;n&eacute;rale launched a &euro;4.8bn rights issue yesterday as it seeks to repay &euro;3.4bn (&pound;3.1bn) worth of state aid and build a war chest for possible acquisitions.<br /><br />The bank joined French rival BNP Paribas in seeking to exit government support, saying that the cash call would allow it to pursue &ldquo;external growth opportunities&rdquo;.<br /><br />However, SocGen said in a statement that it had no plans to renege on its commitment to lend more into the French economy, or to abide by G20 guidelines on remuneration.<br /><br />The bank will use the money to pay back &euro;1.7bn worth of non-voting &lsquo;B&rsquo; shares subscribed to by the French state, as well as &euro;1.7bn in subordinated securities.<br /><br />Some of the remaining &euro;1.4bn will be used to buy a 20 per cent minority interest in Credit du Nord bank, valued at around &euro;510m, from European public sector banking specialists Dexia.<br /><br />SocGen, led by chief executive Fr&eacute;d&eacute;ric Oud&eacute;a, said the capital raising would give it a core tier one capital ratio of around eight per cent, but would have no impact on earnings for 2010.<br /><br />The move signalled a brighter outlook for European banks, following the decisions of Italy&rsquo;s UniCredit and Intesa Sanpaolo to reject an offer of state support. <br />RBS and Lloyds in the UK are also considering cash calls.<br /><br />EUROPE&rsquo;S BANKS GO IT ALONE<br /><br /><strong>Bank</strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <strong>Country</strong>&nbsp;&nbsp;&nbsp;&nbsp; <strong>Capital-raising</strong>&nbsp;&nbsp;&nbsp;&nbsp; <strong>State aid</strong><br />SocGen&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; France&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &euro;4.8bn&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &euro;3.4bn<br />&nbsp;BNP Paribas&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; France&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &euro;4.3bn&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &euro;5.1bn<br />&nbsp;UniCredit&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Italy&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &euro;4bn&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; rejected<br />&nbsp;Intesa Sanpaolo&nbsp;&nbsp;&nbsp;&nbsp; Italy&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &euro;1.5bn&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; rejected<br /><br /><strong>ANDREA ORCEL<br />GBM, BANK OF AMERICA MERRILL LYNCH</strong><br /><br />SocGen&rsquo;s cash call is being managed by the group&rsquo;s own investment bank as global co-ordinator, lead manager and joint bookrunner.<br /><br />JP Morgan, Merrill Lynch and Morgan Stanley are acting as joint lead managers and bookrunners.<br /><br />Merrill Lynch&rsquo;s team will be led by Andrea Orcel (left), executive chairman of global banking and markets for Bank of America Merrill Lynch. <br /><br />He is joined on the capital-raising by Stephane Courbon and Meritxelle Maestre, both managing directors in the financial institutions group.<br /><br />The offering is at &euro;36 per share, two new shares for nine existing shares, at a 26.9 per cent discount to the ex-rights closing price of 5 October.