Slawomir Krupa is solving one problem while exacerbating another. The future Société Générale chief executive, who currently runs the investment banking division, is forming a joint venture with AllianceBernstein’s research unit. It helps give the $20 billion French lender a more rounded equities offering, but also suggests he is doubling down on a low-return business that shareholders dislike.
research unit. It helps give the $20 billion French lender a more rounded equities offering, but also suggests he is doubling down on a low-return business that shareholders dislike.
Second, the venture makes the French bank’s equities business less reliant on derivatives and structured products, which led to heavy losses in 2020. Trading cash equities and selling research typically chews up much less capital and leads to fewer blow-ups. One problem is that investors have generally not been willing to increase their research budgets in the wake of European rules that prohibited banks from bundling the charge into trading fees. And the wider equities trading business is increasingly dominated by larger players, especially U.S. banks. JPMorgan
SocGen plans to take a 51% interest in the venture, with an option to take 100% ownership after five years.
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