Societe Generale expects the transaction to have a positive effect on its CET1 ratio of around eight basis points and to lower its risk weighted assets by nearly €1.95bn.
The deal will have an impact of nearly -€108m on the 4th quarter 2018 earnings of the French investment bank primarily because of goodwill impairment.
Based on total assets, SGS has a market share of 8.4%, which makes it fourth largest bank on the Serbian banking market, said OTP Bank. Further, SGS as a global bank has been active in the retail and corporate segment.
Societe Generale said that the completion of the sale will be based on receipt of clearances from the National Bank of Serbia (NBS) and antitrust authorities, which is expected in the next few months. The scope of the deal with OTP Bank covers insurance and leasing activities of the French bank in Serbia.
Societe Generale said that apart from Albania, Bulgaria, Croatia and Hungary, Serbia will be part of a services agreement signed by it with OTP Bank that would encompass the provision of mutual services across multiple fields like investment banking, capital markets, financing and global transaction banking.
The French investment bank said that through ALD Automotive, its fleet managing and operational car leasing company, it will remain directly present in Serbia.
Societe Generale Group deputy CEO Philippe Heim said: “This agreement with a view to sell Societe Generale Serbia to OTP Bank is another milestone in the execution of Societe Generale’s Transform to Grow strategic plan.
“It highlights the Group’s capacity to simplify its organization and focus capital allocation on high potential synergetic activities with a critical size. In this context, International Retail Banking activities are a key profitable growth engine for Societe Generale Group and we are committed to further pursue their development.”
In August 2018, OTP Bank made a deal to acquire majority stakes in Societe Generale’s Bulgarian and Albanian subsidiaries for an undisclosed amount.
