Gulf investors could benefit from EU crisis: French lender

Societe Generale eyes buyouts, says low corporate valuations in Europe offer 'opportunities'
Gulf investors could benefit from EU crisis: French lender
The euro sank to an eight-month low against the dollar last week
By Shane McGinley
Mon 10 Oct 2011 10:56 AM

There are opportunities for Gulf investors to benefit from the eurozone crisis, despite the likelihood of recession by the end of the year, according to investment bank Societe Generale.

The French lender is on the hunt for acquisitions, its global head of private banking said last week.

“Europe will go into some slowdown of growth and unfortunately we may see some kind of recession at some point in time by the end of the year,” Daniel Truchi, global chief executive of Societe Generale Private Banking said while on a visit to Dubai to meet regional clients.

The euro sank to an eight-month low against the dollar last week and Truchi said there were ways for Societe Generale’s private banking clients in the Middle East to benefit from the crisis in its home market.

“For those who are liquid, there are opportunities… One way to benefit from Europe is that valuations of a lot of corporations are very low. Whether they are much too low compared to their net worth? We believe so and, as such, there are some opportunities,” he said.

Unlike some other European banks, Societe Generale will not need any additional funding in 2011 and has reduced its exposure to toxic sovereign debts in countries such as Greece, he added. "There is no need for a capital injection currently and the drivers of the bank are stable."

With this in mind, the French lender is looking to expand its business by acquiring some small private banking firms, but it sees the opportunities mainly within Europe.

"Valuations have come down and some banks may look at shrinking their balances sheets through the disposals of private banking and corporate banking units," he said. "We are still looking at potential purchases at private banking."

Societe Generale bought a private client investment arm of Baring Asset Management last year and the company's SG Hambros Bank bought ABN AMRO's London-based private banking business in 2007.

“Most of the private banks are in Europe, whether UK, Luxembourg, Holland, Switzerland or France… Opportunities today I think arise mainly in Europe, I don’t see any private banking arm in the Middle East… I don’t think some exist that are complimentary and are as big as we’d like to be,” he added.

The bank has taken the move to reduce its total exposure to the sovereign debt of euro countries, such as Greece, Italy, Ireland, Spain and Portugal, which is currently around €4.3bn ($5.7bn) and represents just one percent of its balance sheet.

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