Hambros Sells Banking Business For 300m

Société Générale on Friday embarked on its largest acquisition outside France when it bought the banking businesses of the UKs Hambros group for 300 million ($495 million).

Société Générale plans to move to Hambros Tower Hill offices and keep the Hambros name, running its private banking and corporate finance businesses as SG Hambros.

We see value in the name, in the prestige, the history, said Patrick Pagni, head of Société Générales UK operations.

The French bank also plans to keep some of Hambros structured finance activities but will scale down treasury and derivatives operations.

Other banks have expressed interest in Hambros bonds division, a leader in issues in Australian and New Zealand dollars, South African rand and Czech koruna, and Société Géné rale said it would explore a possible sale.

 

Philippe Citerne, Société Géné rales chief executive, said he was undeterred by the withdrawal of other European banks from parts of the investment banking business. We started on this business 10 years ago. We are not going to change our mind because such and such a company has decided to stop, he said.

Citerne added that the returns from investment banking looked more attractive to a French bank than they might to a UK bank used to much higher returns on its retail operations.

The rest of Hambros will be wound down. It plans to distribute cash and shares in the listed subsidiaries, Hambro Countrywide and Hambro Insurance Services, to shareholders.

Sir Chips Keswick, Hambros chairman, will become a senior banking adviser to Société Générale while remaining as non-executive chairman of the rump of Hambros. It will basically be a board to oversee an orderly disposal of Hambros plcs assets outside the bank, he said, adding that yesterday was a sad day for him.

The price is subject to a reduction of up to 20 million if net asset value, 282.6 million at September 30, falls below 270 million at completion. The price, a 6 per cent premium to net asset value, surprised many analysts and investors, who have complained about Hambros poor performance over recent years.

Jim Mellon of Regent Pacific acknowledged the price was about 50 million more than he had expected. Peter Butler of Hermes Investment Management, another shareholder, said Sir Chips had done well to sell the bank, which was at the heart of Hambros problems.

Société Générale intends to scale down the treasury and derivatives operations, reports George Graham