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Société Générale AT1: Resolution or Resilience in the Retail Restructuring? Take Shorter Duration

Gravity Works As WeWork Doesn't; Now Plan B

Financials Credit Analyst

Hank Calenti, CFA

CreditContinuum

Credit

Executive Summary:<a href="https://www.smartkarma.com/entities/societe-generale-sa" target="_blank" data-smartkarma-citation="entities:21478:1" rel="noopener">Société Générale (SocGen)</a> recently presented plans to target sustained profitability with a lower standard deviation of performance in its Corporate and Investment Banking (CIB) unit. The firm produced its first annual loss in 30 years from equity derivative positioning as firms cut their prior year dividends due to Covid-19 concerns. As such, SocGen intends to make its results less sensitive to market dislocations.Late last year, SocGen announced a retail banking restructuring plan which effectively increases the resolution potential of the firm should it reach the point of non-viability (PoNV). Taken on its own, this move was not bondholder friendly. Please see: <a href="https://www.smartkarma.com/compose/insight/52061/Soci%C3%A9t%C3%A9%20G%C3%A9n%C3%A9rale%20AT1:%20Resolution%20or%20Resilience%20in%20the%20Retail%20Restructuring?%20Take%20Shorter%20Duration.%20Read%20more:%20https://skr.ma/U3otL" target="_blank" rel="noopener">Société Générale AT1: Resolution or Resilience in the Retail Restructuring?</a> for more details.However, the bank’s plans and actions already undertaken to reduce the volatility in the global markets’ operations may reduce the likelihood of approaching the PoNV. Combined with a meaningful buffer of capital above the level at which Additional Tier 1 bond suspension could be required, SocGen’s AT1 bonds may be ripe for picking.

Executive Summary:Société Générale (SocGen) recently presented plans to target sustained profitability with a lower standard deviation of performance in its Corporate and Investment Banking (CIB) unit. The firm produced its first annual loss in 30 years from equity derivative positioning as firms cut their prior year dividends due to Covid-19 concerns. As such, SocGen intends to make its results less sensitive to market dislocations.Late last year, SocGen announced a retail banking restructuring plan which effectively increases the resolution potential of the firm should it reach the point of non-viability (PoNV). Taken on its own, this move was not bondholder friendly. Please see: Société Générale AT1: Resolution or Resilience in the Retail Restructuring? for more details.However, the bank’s plans and actions already undertaken to reduce the volatility in the global markets’ operations may reduce the likelihood of approaching the PoNV. Combined with a meaningful buffer of capital above the level at which Additional Tier 1 bond suspension could be required, SocGen’s AT1 bonds may be ripe for picking.

SocGen: AT1 Is Ripe for Picking as CIB Is Restructured

Societe Generale Sa

SocGen: AT1 Is Ripe for Picking as CIB Is Restructured