French banking major Societe Generale SA (EPA:GLE) has confirmed that it is holding talks that may lead to the sale of its Greek subsidiary Geniki Bank to another Greek lender, Piraeus Bank SA.
Societe Generale, which owns 99.1% of Geniki, said that negotiations had reached the advanced stage but neither party had yet made a decision and a successful outcome was not guaranteed. The French company added that it would provide updates on the matter in due course.
In an article reporting news of the talks, the Financial Times said that Societe Generale would have to obtain approval for the sale from the Greek government since Piraeus will essentially become a state-controlled enterprise when Greece recapitalises its banks with EU money. Societe Generale became the owner of Geniki in 2004 as part of a privatisation process.
The FT pointed out that Societe Generale was the second French bank to unveil a Greek divestment in as many days. Credit Agricole SA (EPA:ACA) is also looking to exit the Greek market, where it operates through its subsidiary Emporiki Bank of Greece SA. There is speculation that both French lenders may have to retain small holdings in their respective Greek units, with Societe Generale possibly forced to pump additional money into Geniki.
According to the FT article, Societe Generale has already moved to stop new lending at Geniki and has reduced its financing to minimum levels. At the end of June, Geniki had a loan book of EUR2bn (USD2.5bn), which is about one-tenth of the amount for Emporiki, the newspaper added.