PARIS: France’s Societe Generale on Monday accelerated plans to boost profitability by merging its two retail banking networks, resulting in the closure of 600 of its nearly 2,100 branches by 2025.
With low interest rates continuing to crimp lending income and retail banking margins, France’s third-biggest listed lender said the merging of the two networks would save more than €350 million ($424 million) in costs in 2024 and nearly €450 million in 2025.
SocGen said the plan will cost between €700 million and €800 million.
“The amount of synergies forecast by management are in line with our and consensus expectations but restructuring costs are larger than we anticipated,” UBS analysts said in a note.
European lenders have been cutting branch numbers for years, but opposition from unions and politicians over banking access meant many were unable to cut as many as they wanted.
The number of bank branches in the EU fell from about 238,000 in 2008 to 174,000 at the end of 2018, European Banking Federation figures show.
In Germany, Deutsche Bank and Commerzbank have both announced significant cuts to their branch networks this year, with Deutsche Bank set to close about a fifth of its outposts.
With the COVID-19 pandemic having accelerated the shift to online banking across Europe, SocGen also aims to strengthen its Boursorama online operation.
The bank said Boursorama is targeting 4.5 million clients in 2025, up from 2.5 million this year.
Boursorama is expected to register cumulative losses of about €230 million by 2023 with net income of €100 million that year, rising to €200 million in 2025.
As part of profitability initiatives, CEO Frederic Oudea placed SocGen’s equity and credit structured products businesses under review this year after overall operations were hit by market volatility and dividend cancellations in the wake of the COVID-19 crisis.
SocGen expects to pay €1.1 billion in US sanctions finesSocGen to buy Commerzbank’s equity markets and commodities arm