Societe Generale is planning to significantly expand its prime brokerage business as part of Chief Executive Officer Slawomir Krupa’s strategy to strengthen the French bank’s capital markets operations and deepen relationships with hedge funds and asset managers, according to a report by Bloomberg.
The bank intends to “scale up” prime brokerage, with Krupa targeting strong growth in client balances from the roughly $210bn recorded at the end of August.
The expansion forms part of a broader strategy unveiled by Krupa on Monday, combining cost reductions with increased revenue generation. SocGen is targeting annual revenue growth of around 3% over the coming years as it seeks to improve profitability.
The bank has recently expanded its offering to include cash prime brokerage for equities, marking a new area of activity for SocGen. The move comes as banks compete to capture business from hedge funds and other institutional investors seeking financing, trading and custody services.
SocGen said its objective is to strengthen its presence among hedge funds and asset managers while continuing to develop its prime brokerage franchise.
The bank is also targeting expansion across its fixed-income and credit businesses, including derivatives, financing and credit. SocGen said it wants to further develop its fixed-income and credit franchise as part of the wider capital markets strategy.
The push comes as the bank seeks to strengthen areas of its markets business where it has faced pressure from larger competitors. SocGen’s fixed-income operation has struggled to match peers in recent quarters, while several senior trading executives have departed during the year.
In the US, the bank has also been adding personnel to expand its advisory capabilities around equity and debt issuance, while it is exploring opportunities to provide financing for data-centre projects, according to people familiar with the matter.
For hedge funds, the prime brokerage expansion could increase SocGen’s role as a provider of leverage, financing and other services at a time when alternative investment managers are increasingly seeking diversification among their banking counterparties.
