Political transformation adding to French renaissance believes SocGen

Following the election of Emmanuel Macron to the French presidency, the republic’s financial establishment is preparing itself for a renaissance.

“The level of expectation is quite high, patriotism is back and the sentiment of managers and leaders of corporations is rising,” says Jean-François Mazaud, CEO of Société Générale’s private banking division.

He makes these comments while lunching in London’s Mayfair, surrounded by British politicians, journalists and bankers talking animatedly about the toxic fallout of Brexit, experiencing the total opposite of the warm emotions felt by their peers on the other side of the Channel.

“If there is a clear majority in parliament, trust in the system and a high level of acceptance of a new strategy, you will have political stability for the country in the next five years,” says a smiling Mr Mazaud, conscious that his comments can apply to a beleaguered Britain as well as a resurgent France.

But the French mood had been improving well before the recent elections, he says, with Paris seeing “unprecedented levels of business” during the last four years. A steady stream of foreign business visitors cutting deals is now gaining even more momentum after the political transformation.

France’s return to the political stage, with Mr Macron clearly in demand among leaders from the US, UK, Germany and Russia, has given huge confidence to the business and investor community, says Mr Mazaud.

“For two years, we have been quieter, more cautious, which has not been the traditional way for France. Now we will be more confident and active in diplomacy, in the knowledge that France will once again contribute to the stability of the world, with the ambition to achieve peace, economic growth and solutions to problems.”

French business, he believes, has a responsibility to help crystallise this moment of political optimism across the EU, and help keep a sceptical UK within its economic remit. “We need a discussion where we can keep Britain very close to Europe,” says Mr Mazaud, adding that ordinary French people felt an intense solidarity with victims of terrorist attacks in both London and Manchester, their common European home under threat.

Indeed Mr Mazaud’s visits to London are becoming more and more frequent, as the Kleinwort Hambros private banking business – fully incorporated into the group in 2016 after Kleinwort Benson was acquired by SocGen and merged with its existing SG Hambros subsidiary – becomes one of his key preoccupations.

Apart from the domestic French market, Kleinwort Hambros, now accounting for €18bn ($20.5bn) of the group’s €120bn private banking funds, has been the “most significant contributor” of asset growth during 2017. “We have even seen months where the net new money gathered at KH has been higher than that in France,” admits Mr Mazaud, keen to foster “smart private banking with a local touch” in his UK outpost. “Even if these clients are connected to the wider world, we have to be plugged into their local ecosystem.”

Rather than remodelling the London office into an offshoot of Paris, as many staff had expected, Mr Mazaud is rather hoping the more international experience here will feed back to transform the sometime Franco-French culture of his domestic business. “It is the other way round, KH is inoculating us with its culture and I am happy with this. We have 1,000 people on the ground here, which is our biggest workforce outside of France. If we can use the culture on both sides to cross-fertilise, then we can help clients and make a difference for them.”

But this heightened activity is not enough for the live-wire former investment banker, in London for the anniversary of the UK arm’s integration into SocGen. He intends to fuel the franchise’s growth well beyond the 7 per cent posted during the first year. “I think KH has the potential to become one of the top 10 domestic and international private banks in the UK,” he says, with the power of the broader group injecting the expertise needed to comply with Mifid II European regulations.

“The first issue we must look at is the cost of running the business, the second is digitisation and the third is converting clients to a differentiated value proposition, bearing in mind the competition from fintechs and onshore banks,” he says.

This huge opportunity opening up in London is the key reason why SocGen’s private bank has no regrets about giving up its physical presence in Asia, the US and Canada, says Mr Mazaud. He sees the wealth gathering and management value proposition becoming much more effective across the concentrated markets of the UK, Europe and the Middle East than further afield in North America and expensive-to-nail Asian markets.

Mr Mazaud is encouraged by wealth creation and entrepreneurism he sees in European ecommerce hubs such as Berlin, which could set the scene for future private banking propositions. “As a private banker, my vision of digitisation combines both the physical and digital, being able to switch between them very fluidly,” says Mr Mazaud, who rates the transformation of SocGen’s private banking franchise as the proudest of his achievements.

Things did not always run so smoothly for him in past roles, especially in the more cut-throat investment banking sphere, where the institution struggled to transform debt capital markets into a more advisory-based business. Having cut his teeth privatising large industrial groups for the French government, he expected to stroll into the debt capital market trading rooms and enjoy similar success.

“It took me some time to explain to colleagues that we need to be trading differently and transform our approach,” he says, the memories still appearing painful. “That’s one example where I didn’t get it right at the beginning.”

Similarly, when he first took over at the private bank, his initial remarks were all about bringing in investment banking discipline and much increased collaboration with capital markets teams to increased product sales. These days, he is more relaxed, realising that private banking has a different life and culture – more strategic and genteel, less deal oriented and yet still fiercely competitive – all of its own.

Immediate targets for numbers of private clients to be sold investment banking services have been shelved in favour of longer-term strategic objectives.

“You need to build personal relationships over time to make it a successful business and need to accept that this is not a short-term or even medium-term goal,” he says.

“I learned patience. I arrived thinking ‘why don’t we sell private equity and debt tranches to private clients?’ I tried to kick off the revolution myself, but it doesn’t work this way. We need to accept that the private banker has a very special, unique relationship with his clients.”

An accomplished mountaineer in his personal life, Mr Mazaud was also beaten by the elements in his first two attempts to conquer the fabled Alpine Mont Blanc summit, but recently succeeded in fulfilling his long-held ambition. “The windows for such an ascent are very narrow due to the wind and snow and I find a lot of affinity on the mountains with what I do at the bank,” he says.

A combination of exposure to the mountain elements and lessons from the harsh realities of both private and investment banking have given a new-found humility to Mr Mazaud. “While there is always a desire to reach the objective, you have to accept that what is in front of you is often much stronger than you are.”