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