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Societe Generale's (SCGLY) Lyxor Draws Bids From Amundi, Others

As Societe Generale Group SCGLY plans to divest its asset management business, Lyxor; BNP Paribas SA BNPQY and Amundi, the largest asset manager in Europe among others are showing keen interest in the same and hence are exploring tentative bids. The news was reported by Reuters.

With a view to manage finances after incurring huge losses in the first two quarters of this year mainly because of dismal performance of the equities derivatives business, Societe Generale has been preparing to divest Lyxor. Lyxor is the third-largest provider of exchange-traded funds (“ETFs”) in Europe and has nearly €150 billion of assets under management.

In first-quarter 2020, the company reported a net loss of €326 million, whereas, in the second quarter, net loss was €1.26 million, with the performance majorly being marred by the coronavirus outbreak.

Although Societe Generale's equities and fixed-income trading businesses performed better than expected in the third quarter, which aided equities revenues; the company has decided to restructure its retail and markets business to improve financials, and thus is selling its credit and equity structured products businesses.

Notably, in September 2020, Societe Generale announced that it has given Citigroup C the responsibility to supervise the sale and is targeting bidders from both Europe and the United States.

Apart from BNP Paribas and Amundi, JPMorgan JPM, State Street and Deutsche Bank’s DWS have expressed their keen interest in buying Lyxor, a few sources told Reuters.

Per sources, the sale of Lyxor will start this year and will be worth €500-€700 million. However, the final sale price will depend upon the specific products that France’s third-largest bank decides to hand over.

Per sources, Amundi can be viewed as the natural buyer for Lyxor. One of the sources said, “Societe Generale is aware of Amundi's interest but they're looking to run a narrow auction to secure the highest price.”

Other Restructuring Efforts to Improve Financials

A few days back, Societe Generale announced that it will cut almost 640 jobs in France. The job cuts complement its decision to lower expenses by €450 million within its capital markets division by 2023.

In fact, in August, the company’s CEO, Frederic Oudea, reshuffled top management positions after witnessing losses in two consecutive quarters.

And now, Oudea wants to reduce risk and, hence, is shifting toward simpler products. The redundancies, which are expected to affect the bank’s securities business as well as compliance and risk operations, are part of Oudea’s plan to stop trading in complex structured equities products.

Over the past six months, shares of the company gained 45.6% compared with 37.4% growth recorded by the industry it belongs to.

Societe Generale currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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