European Retail Banks Plan Strategic Restructuring

The European retail banking industry is struggling with sluggish customer confidence and the risk of loan defaults. Some European banks have chosen to reorganise in order to reduce losses and adjust to a challenging consumer credit climate.

Most recently, it was reported that BNP Paribas was looking into various options for a significant restructure of its consumer finance division.

The announcement comes as lending by European banks to individuals and businesses has decreased for the first time in nine years as a result of interest rate hikes and a potential eurozone recession.

If the French bank moves forward with the restructuring, it may decide to sell off a portion of the company to reduce expenses and emphasise on divisions and regions that are more lucrative. BNP Paribas has previously committed to selling Postbank, the Eurobank subsidiary in Bulgaria, its personal finance business.

Future sales or service reductions could be in the works.

One of the top aims of the recently announced merger of Societe Generale and Crédit du Nord Group has been to keep branches operating and maintain those crucial client touchpoints as part of another ongoing bank reorganisation being carried out by Societe Generale Group.

The newly established retail bank, known as SG, was officially launched on Jan. 1 in a significant consolidation of the group’s retail banking businesses after more than two years in the works.

Customers in France will have access to a wider branch network thanks to the combination of the two banks’ retail assets than they did before to the businesses’ separation, Societe Generale noted in a news release.

“All customers will benefit from an increased number of points of sale, multiplied by more than two for customers from Crédit du Nord Group and increased by 15% for Societe Generale customers,” the release said.

This network of regional French banks includes Banque Courtois, the oldest surviving bank in France, which was established in 1760 and is a member of the Crédit du Nord Group, which has a long history in the nation’s retail banking industry. The financial institution (FI) was held by Paribas for many years before to being purchased by Societe Generale in 2000.

Such local and regional banks are at odds with the current global banking system, which is dominated by a limited number of international giants, despite continuing to have a significant presence in the French banking scene and being depended upon by numerous customers and small enterprises.

This dates back to the merger and alliance of numerous smaller local banks that resulted in the formation of the Crédit du Nord Group. In essence, its recent fusion with the SG brand is really the most recent instalment in a 100-year tale of conglomeration.

Although there is a compelling commercial argument for pooling resources and simplifying intricate structures, the issue for banks is to do so without compromising the quality of their services.

It remains to be seen if the FI can maintain appropriate service levels and live up to its goal of growing, rather than lowering, the number of branches clients can use as the new SG bank begins reorganising the individual branch networks of its previously distinct components.