Banking

Societe Generale to expand in China

By Li Xiang (China Daily)
Updated: 2011-04-19 13:11

BEIJING - French bank Societe Generale plans to strengthen its capacity in the commodities-hedging business in China in order to tap the country's growing appetite for natural resources, the bank's top executive told China Daily.

The Paris-based lender aims to utilize its strong presence in energy and resource-rich regions such as Africa, Australia and Russia to better assist the outbound investment and acquisitions by Chinese companies, said Michel Peretie, chief executive officer of the bank's corporate and investment banking business.

"We want to bring our worldwide expertise in the market and to offer more commodities-hedging solutions and financing and advisory services to the Chinese clients," Peretie said.

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The French bank is now actively working with large Chinese corporations such as China Petrochemical Corp and China National Coal Group Corp on their overseas energy projects, and it plans to double or triple the volume of commodities trade financing business in China, according to Peretie.

"We are applying for a number of licenses that will enable us to accelerate the pace of our development in China," he said.

China's ever-growing demand for natural resources to fuel its economic growth has created lucrative opportunities for foreign banks that are eager to tap into the Chinese market.

The country's outbound mergers and acquisitions (M&A) in the metals and mining sector grew by nearly half to $15 billion in 2010 from $10 billion a year ago, according to the Thomson Reuters data.

Peretie said that the French bank also aims to expand the derivatives business in China, which will enable the bank to meet the increasing demand of Chinese companies to hedge the risk of fluctuations in commodities prices as well as currency and interest rate risks in the global markets.

Societe Generale was incorporated in China in 2008. The bank currently employs about 700 staff in China and operates eight branches in six major cities including Beijing, Shanghai and Guangzhou.

Peretie said that the bank might consider setting up a joint venture with a Chinese securities firm in the future to explore opportunities in China's A-share market.

He said the bank has been satisfied with its current operations in the country.

"We need to further improve our visibility here to provide more liquidity in the local currency and products to local investors," Peretie said.

Societe Generale formed an alliance with China's Everbright Securities in 2008 to jointly develop derivative products to tap the risk-hedging demand of Chinese investors.