The
regulatory body for French banks (ACPR) published a statement by the end of
January in order to remind of the June 2013 EU legislation that called for the
separation of duties in credit institutions and that was in force since the 1st
of June 2014, except in the event of a special derogation.
It
is not often this control authority publishes such statements to recall that EU
law applies in France too and more particularly to certain French banks…
"The
controlling one cannot be the controlled one", by construction, and the
statute of Senior Independent Director, which was set up in certain businesses
to meet the requirements of multiple investors, could not be worth a real separation
of powers, the former having no legal basis in corporate law.
In
the banking sector, complexity of financial operations, multiple problems
encountered in the derivatives business and the risks generated in on or
off-balance sheet can only lead to consider the separation of powers being
necessary within major banks, and this even though the quality of the teams is
not in question.
We
have discussed for several years with Société Générale's representatives and
Chairman about the importance of powers separation within a bank as large as
Société Générale in the view of institutional investors. We submitted several
resolutions to that end and got the separation right after "Kerviel"
case, but the Board decided the reunification one year later with the appointment
of Mr Oudea as Chairman-cum-CEO... once Mr Bouton had left.
It
is surprising that the Board of Directors of Société Générale has not realised
that the bank was the last large European one with unseparated duties,
surprising that it has not thought ahead of European Commission, which were to
pass a mandatory separation no later than the 1st of January 2014,
and surprising again that it has not listened to the shareholders, which have
consistently been asking for this for several years.
It
seems there is an ongoing discussion in order to postpone this deadline, but
for what purpose? Société Générale is a beautiful bank with quality teams and
the decision to modify its corporate articles in 2014 so as to organise the
governance as wished by regulators and investors would be more beneficial than
to give the impression of still fighting a rear-guard action.
Olivier de Guerre
Chairman of PhiTrust Active Investors
