60 second interview

Face to face | 25 April 2016
P.Aug..3__WEB

TFR catches up with Pascal Augé at the BAFT Paris meeting to hear how cross-selling of FX services have helped cash and trade revenues, and why factoring is on the up

What were your main challenges in 2015?

These varied according to the businesses. Those that were interest rate led such as cash management and cash clearing for banks had to be compensated for by adjusting fees and placing a cap on deposits.

But thanks to the FX team in our corporate and investment banking (CIB) teams we made a strong push on the competitive edge the bank has in exotic currencies.

On cash management we have been moving up the digital curve by implementing new mobile validation and safety features to help treasurers to validate orders. The main priority for us is to continue to better integrate our cash management across emerging countries, Central and Eastern Europe, and Russia and Africa (not just French speaking, because we opened in Mozambique this year) as part of the roll out of the full worldwide business line.

How about trade?

Our set up has been quite stabilised for a long time. The main thing in 2015 was that we took direct responsibility for mainland China and the India desk. Now we are trying to better align the systems and push out some more structured offerings.

We have had to live with more complex geopolitical issues (Russia, Middle East, and Brazil)with some hard competition on pricing. China has not brought the levels of revenues we were expecting for obvious reasons. And we have been facing more change in one of our stronger European markets - Spain. We had some good years when the Spanish banks were under stress but they are now back in the market and we are facing strong competition in pricing.

There have been some mixed results in Germany - which is a tough market for us. There again we managed to make our overall revenues grow thanks to some more efficient cross selling of FX deals and move up the ladder in structured deals.

How has this shaped your product
development?

Following our continuous move towards more structured solutions for clients, we have worked with our factoring arm to define some supply chain finance offerings - which will hopefully prove important during 2016. In addition we have put to the market with a US partner an offering for European corporates importing from Asia.

Looking to the future, we are currently contemplating further movement in the digital space (for example, e-documentation) and have started studying potential concrete application of the blockchain technology in the trade universe.

How will you drive revenues in 2016?

Last year it was mainly cash management for corporate and cash clearing for banks which drove growth. That should continue in 2016 especially as we are making good progress on cash management outside France.

As for trade, I am not expecting a bumper year as geopolitics and compliance issues remain difficult but I hope to deliver better on South-East Asia. Through the promotion of the joint supply chain finance angle I mentioned before we have some good contacts with partner banks in the region keen to tie up with us. We now have a cash management capacity in Asia, which helps provide some good cross selling opportunities in trade, especially towards European importers.

Tell us about the factoring market

Factoring is on the way up overall. It has been rising in France as an alternative to financing and the difference in pricing compared with other forms of finance is reducing.

Our bankers in the retail network are now convinced of the merits of that type of financing compared with straight short term financing without guarantee. Large corporates have moved into factoring over the past three years as an alternative to securitisation, as a way to manage their balance sheet exposures and also for corporate social responsibility reasons. In reverse factoring for instance, we closed a deal in late 2015 with a large French telco providing finance to their large pool of suppliers.

There again, in the factoring space, we have been integrating our seven international subsidiaries to form a better aligned business line and we are also considering partnering with some fintech
in that universe.

 

Pascal Augé is head of global transaction and payment services at Societe Generale

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