Krupa, hard-driving veteran entrusted with reviving Societe Generale

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PARIS – Slawomir Krupa had one clear mission when he took over at Societe Generale on Tuesday: to remake France’s third-largest bank as a first-tier bank with a distinct identity.

The 48-year-old, who has spent his entire career at Societe Generale, must make a difficult balancing act, improving shareholder returns without taking undue risk on the shaky backdrop of bank stocks.

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“It is very important to clarify (things) when necessary to all stakeholders and say: This is what Societe Generale is,” Krupa, who recently headed investment bank Societe Generale, told Reuters in an interview. He is due to lay out his plans for the bank by the fall.

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After turbulent 15 years under his predecessor, Frederic O’Dea, who consolidated units, sold companies — including a costly exit from Russia — and cut risk, the bank’s share price is trading at just 30% of the book value of its business.

As a benchmark for investor support, that would put it on par with Deutsche Bank but further away from its larger French rival BNP Paribas and at the lower end of European lenders.

Societe Generale’s weakness was illustrated earlier this year when its stock was among the hardest hit as investors sought safety after the collapse of Silicon Valley and Credit Suisse. Those who appointed Krupa hope he can lead the bank out of this danger zone.

A person familiar with Societe Generale’s board’s decision to appoint him as CEO said the top priority is to improve efficiency within the bank’s current structure, as Krupa did after taking over the investment bank in early 2021.

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This could include seeking to squeeze more heavily into other parts of the business to reduce what is seen as too high exposure to riskier investment banking.

In his previous role, Krupa cut costs and tackled trading risks, said the person, who is familiar with the thinking of SocGen’s board, paving the way for a divisional turnaround.

Two years later, investment bank Societe Generale posted the largest annual growth in pre-tax earnings among the three listed French banks, cementing it as the group’s main profit driver.

Breaking traditions

People familiar with the process said Krupa’s reputation as a problem-solver helped make his case for the top job when he appeared before the independent directors of Societe Generale in September.

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Despite his 26 years at the bank, he was also seen as an outsider, because unlike the CEOs of Societe Generale a century ago, he had not previously been in the upper ranks of France’s public administration.

One person said that the council preferred to deviate from tradition. Born in communist Bulgaria in 1974, Krupa’s family emigrated from Poland to France when he was six.

His hard driving style is also seen to contrast with Oudea’s.

“Slawomir has…a way of getting ahead, of taking people with him. Frederic (Odea) is more collegial,” said Jean-Pierre Mouster, former CEO of UniCredit and former head of investment bank Societe Generale who appointed Krupa chief of staff in 2007.

A former senior Societe Generale executive said Krupa, who describes himself as a straight talker, can be impatient and demanding.

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Others say that honesty is strength. A senior Societe Generale client, who met Krupa on several occasions, told Reuters he was not part of a French institution where no one wanted to say no.

Krupa faces challenges right from the start. Some investment bankers are suggesting that the group could eventually be merged with a European competitor.

One of them, who asked not to be named, said such a move would benefit Societe Generale because it was a “mid-sized player” dwarfed by US rivals and local giant BNP Paribas.

This opinion is echoed by Jean Dermene, professor at INSEAD Business School. How can profitability be improved without mergers? I don’t see how that is possible at all.

For now, Krupa is focusing on operational questions, such as finalizing a joint venture with investment management firm AllianceBernstein for global cash equities and equity research. This may provide a platform for growth in the US.

But Krupa said a major merger is not on the cards in the near term.

Strategically, does Europe need stronger banks? “The answer is yes, but I don’t think that’s really on the agenda at this point,” he told Reuters. (Reporting by Matteo Rosemayne; Editing by Elisa Martinuzzi and Kathryn Evans)