We speak to Pascal Augé about the restructure within Société Générale and the bank’s related drive for providing service excellence to its corporate clients. We also discuss the bank’s role on the global stage and the benefits of paving the way as a SWIFT pioneer.
Head of Global Transaction Banking
Pascal Augé has been Head of Global Transaction Banking (GTB) at Société Générale since January 2012. From 2009 to 2012 Pascal was Chief Executive Officer of Western Europe at Société Générale Corporate and Investment Banking. Before that, he was successively Head of Corporate Banking in UK (1998-2001), Country Head for Germany (2001-2005) and Country Head for Italy (2005-2007) for Société Générale Corporate and Investment Banking.
Given today’s tough operating climate, what aspects of treasury do you think should be at the top of the corporate agenda and why?
There are three themes that lie behind most of the discussions we have with corporate treasurers these days. In the volatile environment that we are currently in, it is difficult to see the direction in which your company is going, and so risk management is becoming an increasingly essential focus and a subject of constant dialogue.
Linked to that, corporates are now, more than ever, looking for safety and assurance, especially as the market leans towards new modes of payments and more complex flows. An extension of this, simplicity becomes very appealing. The simpler the process is, the easier it is to manage and, ultimately, the safer it will be.
When it comes to payment risk, our clients are very aware of the fact that there is increased tension in this space right now, to some extent linked to the overall economic crisis and also the ongoing turmoil within the Eurozone. This idea of payment risk then brings to the fore the increased importance of automation within the corporate processing and reconciliation functions.
For these priorities, there is a whole spate of offerings in the Global Transaction Banking (GTB) space. What matters to Société Générale is what we can do to minimise the level of risk that our clients are taking. We are investing massively in our IT systems at present to be able to provide a more streamlined payment process for our corporate clients. One of our attractive characteristics is having the capacity to offer a high-level quality service to our clients. We are continuously striving to improve that service as much as possible.
The corporates are aware that they need to ‘tidy up’ their organisations between now and the end of the year so, for us; it’s all about accompanying and supporting our clients during this change management process.
Regulations have been high on the corporate agenda in the last decade but we see the pace of adoption increasing, especially since December when the deadline for SEPA was announced. Yet, the amount of corporates that are fully prepared is negligible in comparison with ideal adoption figures. As we move towards February 2014, however, there is a growing sense of urgency as the implementation deadlines for the change in regulations come ever closer. The corporates are aware that they need to ‘tidy up’ their organisations between now and the end of the year so, for us; it’s all about accompanying and supporting our clients during this change management process.
How is Société Générale helping clients to overcome the treasury hurdles they currently face? How has the bank’s approach to client relationships evolved over the last few years?
What we are discussing on the GTB scene is something that has been communicated by our global relationship managers. We are not just pushing one product for the corporate – we are building a framework of products that are individual to the corporate’s needs. This is central to the client relationship and a core global ambition of the bank.
From a relationship point of view, we always make sure that our clients are able to liaise with several highly qualified consultants who form a solid partnership with them over time. This is vital, especially when a client moves to SWIFT, for example, as the implementation is such a long process. Corporates will need the support and the technical know-how to flag exactly where any issues are: this is where our specialists can add real value. These issues are not always product related but they may occur in the way the project is set up or in the way plans are communicated to and addressed by the various subsidiaries, etc.
When a corporate is introducing a specific new type of function within their organisation, whether SWIFT or otherwise, it is not just about plugging into a new programme. It is about preparing to embark on something that is new and different, adapting the entire organisation accordingly. That’s where we come in. It is not just technical advice that we are giving them; it is the whole service package. We take everything into consideration, from the legalities to the accounting. What we have found most beneficial for all involved, and are doing more and more of, is cross referencing. Whenever we complete a new project that is successful with one of our clients, we ask that corporate to be a reference point for our other clients, so they can share their experience and views.
Our international network also has a part to play in helping our clients to overcome recent obstacles in the environment. Every venture we embark on, we endeavour to be at both ends of the transaction. When you are a global bank such as Société Générale, with 80 subsidiaries, operating in more than 70 countries, it is our responsibility to take care of our clients from end-to-end. Taking a trade deal, for example; we have the resources to liaise with exporters in Europe or in China to provide support for the corporate from start to finish. It is somewhat of a speciality to provide an end-to-end service such as this, which is very valued by the client, particularly in this unstable environment, allowing them to manage the risks on both sides.
At a SWIFT conference held in Paris recently, attended by a mixture of banks and corporates, the overriding sentiment was that the corporates need banks with whom they are able to have that trusted relationship.
The discussion that banks are having with corporates now is improving and will only get better. At a SWIFT conference held in Paris recently, attended by a mixture of banks and corporates, the overriding sentiment was that the corporates need banks with whom they are able to have that trusted relationship.
What is unique about Société Générale’s GTB offering?
We are a major player in the trade finance area and we also have one of the most productive and effective networks abroad. For example, we have the largest privately owned bank network in Russia, Rosbank, with a significant presence in trade there. We are also a leading player in the regions of China and Africa; continents which are fast becoming an area of value for our clients and partner banks. We are collaborating with our banking partners and driving a lot of added-value by bulking together our assets and networking effectively and efficiently across the globe.
In order to better manage their risk, a lot of clients have been tying together some factoring solutions to some trade solutions, which we have been on hand to help them with.
It is always so important to have cross-border banking linked to cash management and trade services. Taking this one step further, we also tend to align factoring with this. In order to better manage their risk, a lot of clients have been tying together some factoring solutions to some trade solutions, which we have been on hand to help them with.
Why is trade finance such an area of focus?
In this regard, it is important to understand the history of the bank itself; it was founded 150 years ago, and its original concept was to accompany the top French clients at that time and enable them to grow both domestically and abroad. In saying that, it is not just trade finance that is part of the institution’s DNA; we have been part of the global top three institutions in export finance for several years.
Beyond GTB, the bank’s key areas of expertise are export finance, commodity finance and, as a consequence, trade finance, which has grown alongside both of those businesses. However, most of our clients don’t make the distinction between these different areas of finance when they are looking for advice, they turn to us, the experts, for this.
Trade is also very much linked to foreign exchange (FX); we have always been a historical player on derivatives so we already have a competitive edge in this area. We are also able to accompany our clients in several emerging markets such as China, Africa and Russia for example.
We are the leading foreign bank in Egypt but we are also strong in regions such as Ghana. We can offer the accompaniment of flow between China and Africa, a lucrative trade which has grown in the last three years at an average 18% per annum.
When in discussions with Chinese clients, it is a very attractive strength that we are able to open the doors of Africa to them, especially in French-speaking countries, but not exclusively. We are the leading foreign bank in Egypt but we are also strong in regions such as Ghana. We can offer the accompaniment of flow between China and Africa, a lucrative trade which has grown in the last three years at an average 18% per annum.
Also, where does the GTB unit sit within the Société Générale Group now?
When we were embarking on the re-organisation of the bank, we discussed a complete regeneration of how we could better service our client pool. Société Générale is fully committed to accelerating growth and excellence through multiple initiatives across all business lines, reflecting the ‘Ambition SG 2015’ plan that we are undergoing.
As part of this new project, instead of reporting only to the French network, GTB is now reporting to one of the three general managers of the bank. We are servicing the three main networks we have: the French network, the network outside France, and the network on the Corporate and Investment Banking (SGCIB) side. Now mutually servicing all three networks, GTB can provide services to the entire client base.
The restructure has only been in place since 1st January 2012 so it is a little early to tell how effective it has been in terms of processes. What we are seeing already though is that there is now a more open dialogue towards pushing projects. We have direct targets and objectives with all of the three networks, something that was much trickier to achieve in the past.
Despite reporting to one of the three general managers, we are still monitored as a new project. This means presenting the executive committee with status reports of how the organisation is now functioning in this new arrangement. This gives them a chance to make any amendments or tweaks to the projects if necessary. We are all very excited about the restructure and look forward to really embracing all of the opportunities it presents.
We are all very excited about the restructure and look forward to really embracing all of the opportunities it presents.
The bank is also a pioneer in the SWIFT space. What trends have you seen among corporates? Is adoption becoming more mainstream?
As I mentioned earlier, corporates are looking for more safety within their businesses and so, the security that the SWIFT networks can provide is proving attractive. To date, we have accompanied around 200 clients in their move to SWIFT, so we are able to take that experience and encourage more and more clients to get on board. But that’s not to say that it is an easy task to implement and we are very conscious that this is a process to which we need to allocate significant time and energy.
Generally, corporates move to the basic cash management aspect of SWIFT but we are now attempting to get clients to migrate to SWIFT on the trade side also. We have paved the way with Alcatel, which will be a reference for us on international guarantees as it is the first French client that we have gone live with in that respect.
Finally, what plans do you have for developing the GTB offering going forward?
We are in phase one of our ‘2015’ project. Our drive is to upgrade our offerings across the board; improving the delivery on the cash management side, leveraging our assets on the trade side, and enhancing the authenticity of our four core businesses: cash management, trade services, cross-border banking and factoring. There is a lot to be done by combining these four businesses and through them, pushing the FX for our clients too.