Banks face regulatory barriers to rapid AI reform, says SocGen chief

{"text":[[{"start":9.36,"text":"Société Générale’s chief executive said regulators would stop AI from swiftly transforming the banking industry, even as the French lender aims to use the technology to save up to €600mn by 2029."}],[{"start":22.78,"text":"Slawomir Krupa, who has led SocGen since 2023, said banks were “so regulated and so supervised” that AI would not rapidly transform how they operate."}],[{"start":32.4,"text":"“In our industry, trust is absolutely key,” he told the FT. “It took the industry years and years to get [basic things like credit models] right with supervisors. So there will be regulatory and supervisory barriers to speed, [but] not to ultimate disruption.”"}],[{"start":48.76,"text":"Krupa’s comments came as SocGen presented a strategy update on Monday that included a renewed cost-cutting drive, improved profitability targets and plans to return more than €21bn to shareholders by 2029."}],[{"start":61.58,"text":"The bank said it would target €1.9bn of gross cost savings by the end of 2029, including between €500mn and €600mn from AI-related initiatives."}],[{"start":72.8,"text":"It said the programme would reduce its cost base by about 2 per cent in absolute terms once inflation and additional investments were taken into account. SocGen also announced a new “strategic agreement” with Anthropic, aimed at accelerating its adoption of AI."}],[{"start":null,"text":"

"}],[{"start":87.88,"text":"Krupa told the FT that AI-related savings would come primarily from IT, where the technology would help improve coding, simplify systems and automate processes."}],[{"start":97.44,"text":"However, he said AI adoption in client-facing roles would be slower: “On the client end it’s going to be the slowest in my view . . . [banks] better know exactly what’s going on.”"}],[{"start":107.56,"text":"SocGen said the cost-cutting push would reduce headcount through “natural attrition”, although he declined to set a target for job reductions over the next three years."}],[{"start":116.28,"text":"Krupa must now persuade investors that France’s second-biggest bank by market value, worth about €56bn, has alluring growth prospects in a European banking industry where big-ticket deals remain elusive."}],[{"start":128.28,"text":"He said lowering costs would remain the “bedrock” of SocGen’s strategy, arguing that doing so would both boost profitability and make the bank more resilient during downturns."}],[{"start":139.04,"text":"The bank is targeting average annual revenue growth of 3 per cent. Krupa said it would invest in areas including prime broking, services to hedge funds, its investment bank or its rebounding French retail business."}],[{"start":152,"text":"The latter will be reorganised to better integrate its growing online franchise BoursoBank with its branch network and private bank, including targeting wealthy clients, he added."}],[{"start":null,"text":""}],[{"start":162.16,"text":"SocGen shares rose almost 4 per cent in morning trading in Paris on Monday."}],[{"start":167.24,"text":"The stock has rebounded sharply under Krupa following years in which the French lender struggled with weak profitability and a series of damaging setbacks, including a €4.9bn rogue trading scandal and a €3.3bn loss on its exit from Russia."}],[{"start":183.68,"text":"Krupa said SocGen was in a “completely different situation” from three years ago, when it faced “insufficient capital, insufficient profitability” and “quite a bit of a reputation issue” stemming from concerns over its risk profile."}],[{"start":196.76,"text":"“We want to be relevant and strong in a [European market] which has become highly competitive,” he said of the bank now, adding that it wanted to give investors “new reasons to value us better”."}],[{"start":207.12,"text":"“We have excess capital. So, just logically, we can now consider [potential M&A] that we couldn’t three years ago.”"}],[{"start":213.96,"text":"Since taking over, Krupa has embarked on a significant overhaul, which has centred around strengthening SocGen’s capital position and selling a series of businesses."}],[{"start":222.96,"text":"On Monday, the bank set a return on tangible equity target — a closely watched measure of profitability — of between 13 per cent and 14 per cent by 2029, rising to more than 15 per cent from 2030. It is also targeting a cost-to-income ratio of below 55 per cent."}],[{"start":240.38,"text":"The bank said it could return more than €21bn to shareholders between 2026 and 2029 through dividends and share buybacks."}],[{"start":255,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1789986998_7081.mp3"}