PARIS/BUDAPEST (Reuters) - French bank Societe Generale SOGN.PA has agreed to sell its bank in Serbia to Hungary's OTP Bank OTPB.BU, as SocGen continues its retreat from parts of eastern Europe while OTP gradually increases its presence in the region.
SocGen did not disclose the amount of the transaction, although it said the sale would have a 108 million euros ($123.25 million) negative hit on its fourth quarter earnings.
The sale will nevertheless have a positive effect on the French bank’s solvency ratio. SocGen’s core equity tier 1 ratio will rise by 8 basis points while its risk weighted assets will fall by 1.95 billion euros.
Shares in SocGen were down by around 2 percent in early session trading on Thursday, with the broader market falling by a similar amount after the U.S. Federal Reserve raised interest rates and dashed hopes of a more dovish outlook. [MKTS/GLOB]
SocGen expects to close the Serbian deal in the coming months following regulatory approval.
In August, the French bank had already agreed to sell its banks in Bulgaria and Albania to OTP. Societe Generale will remain present in Serbia via its car fleet management business ALD ALDA.PA.
OTP, central Europe’s largest independent lender, has been on an expansion drive in recent years to capitalize on the fact that major western banks with a smaller local footprint have been scaling back their presence in central and eastern Europe.
Last month, OTP got the green light to buy SocGen’s Bulgarian businesses, taking its market share to 19 percent. OTP, which also bought Splitska Banka in Croatia last year, has said it was looking for further expansion opportunities.
SocGen has said it intends to rejig its footprint in a bid to boost profits by exiting from countries or businesses where it lacked critical size, while consolidating its position in areas where it is already strong.
In 2018, Societe Generale has sold assets in Belgium, eastern Europe and South Africa, while it has acquired the market activities of Frankfurt-based Commerzbank CBKG.DE.
The French bank’s Chief Executive Frederic Oudea has identified Germany as a crucial market.
Reporting by Inti Landauro and Gergely Szakacs; Editing by Sudip Kar-Gupta
Our Standards: The Thomson Reuters Trust Principles.