Banking: SocGen - rights issue to repay Gov
French bank Societe Generale is to launch a rights issue to raise EUR4,800 million. But it's not going to have any money left over after the issue.
SocGen took EUR3,400 million from the French government in emergency support. But it stands little chance of repaying that money out of recovering revenue or asset values. But it wants to get the government out of its hair as soon as possible so it's asking shareholders to have faith in it, and shell out EUR36 for two new shares for every nine they already hold.That, SocGen says, is a discount of more than 25% against yesterday's closing price.
The offer will be open from 8th October until 20th - and is intended to raise more than is needed to repay the government.
The rest of the money will not sit in the bank, so to speak. SocGen owns 80% of Credit du Nord, a regional French bank. The remaining 20% is owned by Dexia. The balance of the money raised in the rights issue is to buy that outstanding stake, bringing Credit du Nord wholly within the SocGen group.
SocGen is bolstering its presence at home - but is not shying away from its declared strategy of developing its presence in Russia, India, China and Brazil.
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