Thu, 09/08/2007 - 19:25
Société Générale and Calyon have reached final agreement on the merger of the brokerage activities currently carried out by their respective subsidiaries, Fimat and Calyon Financial, and announced plans to launch the combined business under the name of Newedge in early 2008.
The merger agreement is subject to the approval of supervisory authorities. Newedge, which will be owned equally by Société Générale and Calyon, itself a subsidiary of Crédit Agricole, will be headquartered in Paris, have the status of a bank, and is expected to have a total staff of around 3,000 worldwide.
Newedge will have a corporate governance structure designed to ensure its operational autonomy and avoid any conflict arising between the shareholders, which will enjoy the same rights and representation on the board of directors.
Newedge's chairman, Marc Litzler, currently deputy chief executive of Calyon, and vice-chairman Philippe Collas, deputy chief executive of Société Générale with responsibility for its global investment management and services division, will be appointed for a two-year period, with an alternation between the two shareholders.
Patrice Blanc, chairman and chief executive of the Fimat Group, will be appointed chief executive of Newedge while Richard Ferina, Calyon Financial's chairman and chief executive, will become deputy chief executive.
The partners say that in a fast-growing market, Newedge will rank as a world leader in execution, especially electronic execution, as well as in clearing derivative products traded in more than 70 organised markets in the US, Europe and the Asia-Pacific region. Last year the two brokerage businesses handled a combined total of more than 1.3 billion contracts and posted sales of more than EUR1bn.
In addition to its core business as a futures commission merchant, Newedge will continue to offer a range of complementary execution services on OTC markets and on all spot markets, including money market instruments, bonds, equities, foreign exchange and tangible commodities.
Newedge will bring together the expertise of the two businesses in areas such as risk management, cross margining and financing, and provide a prime brokerage offering as an alternative to the services proposed by investment banks to their institutional customers. The merger is expected to generate diversified revenue streams from a broader customer base of banks, brokers, firms and management companies including hedge funds.
Société Générale Global Investment Management & Services has 11,435 employees and includes Société Générale Asset Management, which had EUR393.4bn under management at the end of June, SG Private Banking, with offices in 23 countries and EUR73.8bn in assets, Société Générale Securities Services, which currently ranks third among securities custodians in Europe with nearly EUR2.6trn in assets, and direct banking business Boursorama.
Calyon Credit Agricole CIB, the investment banking arm of the Credit Agricole group, has more than 13,000 employees in more than 55 countries and is active in a broad range of businesses including capital markets, brokerage, investment banking and structured financing, corporate banking and international private banking.
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