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Frederic Oudea. Picture: REUTERS/BENOIT TESSIER
Frederic Oudea. Picture: REUTERS/BENOIT TESSIER

Societe Generale CEO Frederic Oudea, who navigated the French bank through a rogue trading scandal and the eurozone crisis, will leave next year, ending a tumultuous 15 years at the top.

The longest-serving CEO of a major European bank, Oudea took charge at the height of the 2008 financial crisis as the bank grappled with the multibillion-euro fallout of a rogue trading scandal.

A student of France’s elite Polytechnique engineering school and of the National Administration School, whose graduates include French presidents Jacques Chirac and Emmanuel Macron, Oudea started his career in the civil service before becoming one of the country’s best-known bankers.

He prepares to leave as the bank struggles with the aftermath of a pandemic and the economic uncertainty created by war in Ukraine.

“It’s been a very bumpy ride,” said Jerome Legras of Axiom Alternative Investments, who said some investors were frustrated by what they deem the bank’s modest progress.

In common with many European peers, the share price of Societe Generale has not recovered from the 2008 debt crisis. At about €24, it is less than half of its level when Oudea became CEO.

Oudea became Societe Generale’s finance chief in 2003, but long played a secondary role to Jean-Pierre Mustier, then head of SocGen’s investment bank and considered the likely future CEO.

The scandal in 2008 over a €4.9bn loss triggered by trader Jerome Kerviel turned the tables in favour of Oudea, who became CEO at the age of 44.

The eurozone debt crisis hit French banks in particular because they were heavily exposed to debt in Greece and other countries at the periphery of the eurozone. This triggered speculation, including that the French government could be forced to nationalise lenders.

In 2011, as Greece struggled to cope with debt repayments, jitters swept through Europe over the future of its banks.

France and its lenders were considered vulnerable. A flurry of media reports and speculation, including that Societe Generale even faced collapse, rocked its shares, putting Oudea to his toughest test.

Pressure abated on the industry when Mario Draghi, who was European Central Bank president at the time, pledged to do “whatever it takes” to back the euro.

Oudea is credited with shoring up the bank’s capital base, its weakness after the 2008 crisis, selling some businesses and paring back its Eastern Europe arm.

The sale of the bank’s stake in Amundi in a 2015 multibillion-euro stock-market listing granted Oudea a windfall. He later sold the exchange-traded funds specialist Lyxor to Amundi.

He made Boursorama the top French online bank while cutting branches through a merger with the Credit du Nord network.

Oudea’s arguably boldest move was at the start of this year when Societe Generale’s car leasing division ALD, which he floated in 2017, signed a €4.9bn deal to buy Dutch rival LeasePlan.

Nonetheless, some remained underwhelmed by Oudea. “Investors felt there was a lack of a clear strategic goal,” said Legras.

The risks from trading continued to overshadow the bank. In early 2020, it posted a surprise first-quarter loss after a revenue wipeout at its equity trading division as a result of market volatility caused by the pandemic. The bank has since overhauled that division.

The bank paid $1.3bn  in penalties for wrongdoing, including bribing Libyan officials, an episode for which Oudea apologised.

From 2004 to 2009, SocGen paid more than $90m in bribes through a Libyan broker to secure 14 investments by Libyan state-owned financial institutions, the US justice department had said.

In April, SocGen became the first major Western bank to announce its departure from Russia, navigating a highly charged standoff between Russia and the EU, which has been ratcheting up sanctions in response to Moscow’s invasion of Ukraine on February 24.

The bank announced it would sell its Rosbank business to Interros Capital, a company linked to Russian oligarch Vladimir Potanin, writing off roughly €31bn.

SocGen was one of a handful of European banks with a significant presence in Russia and the sale was seen as a coup by investors despite the heavy cost because it drew a line under its involvement with Russia.

Reuters

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