Societe Generale shares are higher Tuesday after the French investment bank announced the acquisition of Commerzbank’s equity markets and commodities (EMC) business. The deal will see Commerzbank divest itself of non-core assets while SocGen will boost its presence in a number of markets.
Neither firm disclosed the price.
By 1200 BST, SocGen shares were 0.90% higher at €36.37. Meanwhile, Commerzbank shares gained 2.44% to hit €8.38.
Purchase to boost SocGen’s German presence
The deal will see SocGen purchase Commerzbank’s EMC business. That includes all the investment Products, Flow Products, and Asset Management businesses worldwide. The deal also means all the associated market making, sales and structuring capabilities that come with it, too.
SocGen said that the deal is not only a good one for the French bank, it’s also in line with the firm’s strategic plan.
“Societe Générale and Commerzbank’s EMC franchises are complementary and present an important potential of synergies,” said SocGen’s Deputy CEO, Séverin Cabannes.
“In addition, while complementing Lyxor’s ETF franchise, this acquisition would be transformational for our activities in Germany as it would enable Societe Generale to reach a new scale in the leading Eurozone economy,” he added.
The news is also good for investors as the French bank said it would have a “positive impact on the Group’s Return On Tangible Equity and it would have a limited impact on the Group’s Core Equity Tier One ratio.”
While the deal between the two European banks is considered a good move and in line with SocGen’s strategy, it also works well for Commerzbank’s planning.
“With this agreement, we are delivering a further milestone in the implementation of our ‘Commerzbank 4.0’ strategy,” said Commerzbank’s CEO Martin Zielke.
“We are simplifying our business, we are contributing to our cost-cutting targets, and we are freeing up capital for the benefit of our core business with private and corporate clients,” he added.