Moulay Hafid Elalamy’s return to the financial scene is causing a stir in business circles. After exiting the insurance sector six years ago following Saham Assurance’s sale to South Africa’s Sanlam, the former Minister of Industry and Trade is reportedly close to finalizing the acquisition of Société Générale France’s majority stake in its Moroccan subsidiary. The deal, valued at approximately 8 billion dirhams, gives Elalamy’s holding company a majority 57.66% ownership in Société Générale Maroc.
In accordance with the law on freedom of pricing and competition, the Council of concurrence (conseil de la concurrence) must issue a press release within five days of receiving any notification file, which they have done.
The Wali of Bank Al-Maghrib (BAM), Abdellatif Jouahri, revealed that he had received Société Générale’s top management, who informed him of the substantial constraints weighing on the banking group in Africa and hinting at its intention to withdraw from Morocco, alongside other subsidiaries on the continent.
“The law is clear: in the event of a change in shareholding exceeding 50%, a new approval is required,” said Jouahri. “I’ve asked them to think it over and come back to us once they’re ready and the decision has been made. We’ll need to examine the industrial project, the business plan, the added value that the new buyer will bring, and be convinced that the operation will be beneficial for both the bank and the State. In this case, we will grant the new approval.” Regarding BAM, the approval process is still ongoing
The banking group’s current shareholding structure were split between Société Générale France (57.6%), the Aït Mzal family’s Deveco Souss group (27.54%), Mohamed Tazi’s Patrimoine Gestion et Placements holding company (3.23%) and various other shareholders (11.56%), according to data from the Moroccan Capital Market Authority (AMMC).
Hit the jackpot?
This deal could well be the takeover of the year. Moulay Hafid Elalamy is taking control of the fourth-largest bank in Morocco, behind Attijariwafa Bank, Banque Populaire and Bank of Africa.
Société Générale Maroc is in excellent financial health with nearly 400 branches, more than 3,000 employees and one million customers. At the end of 2023, the Group’s consolidated net banking income (NBI) stood at 5.57 billion dirhams, up 7.3% from the previous year. Net banking income (NBI) amounted to MAD 4.82 billion, up 9.1% on 2022.
Last year, the bank’s deposits remained stable, at 87.28 billion dirhams (0.21%) consolidated and 80.65 billion (0.74%) social. On the credit side, outstandings amounted to 94.3 billion dirhams in consolidated terms and 80.09 billion in corporate terms, down 1.23% and 1.21% respectively from the previous year.
In addition to commercial banking, the acquisition of a majority stake in Société Générale Maroc would enable Elalamy to gain control of several of the banking group’s subsidiaries which operate in various financial sectors. These include Eqdom, the listed consumer credit specialist, 53.72%-owned by Société Générale Maroc, and La Marocaine Vie, a 48.01%-owned insurance company. Other subsidiaries include Sogelease Maroc, a major player in the country’s equipment and property leasing market, the mutual fund management company Sogecapital Gestion, the stock exchange company Sogecapital Bourse, and the Group’s offshore bank, all of which are wholly owned by the French banking group’s Moroccan subsidiary.
A strategic plan
For Societe Generale France, the sale of its Moroccan subsidiary is part of a vast policy of withdrawal from the African market at a time when the bank is seeking to make significant savings by implementing a new strategic plan. The plan is the brainchild of CEO Slawomir Krupa and aims to save 1.7 billion euros by 2026 in order to improve the bank’s profitability after several years of rollercoaster results marked by financial crises and scandals.
Last June, the group with the red and black logo began to scale back its operations on the continent, announcing its withdrawal from Congo, Equatorial Guinea, Chad and Mauritania. In addition, a strategic review was underway for Tunisia, where it is represented by Union Internationale de Banques (UIB), in which it holds a 52.3% stake. Five months later, in December 2023, the French bank announced the sale of its subsidiaries in Burkina Faso and Mozambique.
But unlike its Moroccan subsidiary, the regional leader with 22.5% of all revenues generated by the parent company in Africa, the other six subsidiaries were not as strategic for the group, which wishes to “focus on markets where it holds a leading position.” In Burkina Faso, for example, Société Générale has just 17 branches and employs around 280 people. In Mozambique, its presence is limited to 6 branches, with around 140 employees.
Saving the day
The sale of Société Générale Maroc was a real turn of events for financial specialists who, until recently, were betting on the preservation of the Group’s flagship in Africa. Analysts polled by TelQuel explain this potential withdrawal by several reasons, both strategic, economic and regulatory.
“Société Générale has not been doing very well in recent months, and the markets are dubious about its ability to bounce back. Difficult projects have been carried out without any real added value, such as the merger with Crédit du Nord. Moreover, the Group has had to contend with regulatory and ethical problems, which have led to fines and damaged the brand’s image” , said a former executive of the French bank.
The corporate strategy consultant is referring to the €4.5 million fine imposed on Société Générale in France in January 2024 for unjustified bank charges levied between 2019 and 2021. The bank has acknowledged the facts and assures that it has reimbursed the customers concerned.
In terms of performance, the group saw its net income, group share (RNPG), fall by 59.8% year-on-year, to €430 million. In the last three months of the fiscal year, net banking income (NBI) for France’s third-largest bank by market capitalization fell by 9.9% to €5.96 billion. Market activities were down by 0.8%.
The specialist explains that several additional factors have added to the bank’s difficulties in Africa in recent months. In addition to a decline in the return on equity invested on the continent, the bank has had to contend with stiff local competition from « powerful and innovative » pan-African groups. These include Ecobank, present in 35 African countries and 27% owned by Qatar National Bank; the Nigerian Access Bank, present in 15 countries across the continent; and Bank of Africa and Attijariwafa bank, with 19 and 12 African subsidiaries respectively.
Selling its shares in Société Générale Maroc would therefore be a strategic move aimed at maximizing the current valuation of the Moroccan subsidiary. The latter is maintaining its local market share and achieving excellent results, while at the same time having untapped potential, notably linked to European prudential regulations.
“Faced with so many constraints on the continent, you have to act quickly and sell to get the best price, while trying to restore your image with the markets and shareholders. From Saham’s point of view, this is a great opportunity. There is still considerable room for maneuvering to develop the bank outside the European guidelines and their excessive prudential rules,” says the former banker.
Loss of monopoly
Other factors, more political and cultural, may also explain this trend towards the disengagement of French banks from the continent. Société Générale is not alone; other major French groups began to sell off their assets in Africa some years ago. Crédit Agricole was the first French bank to sell off its African subsidiaries after the 2008 financial crisis. The latest to do so was the sale of its entire 78.7% stake in Crédit du Maroc to the Bensalah family’s Holmarcom group.
In 2018, the mutual group BPCE (Banque Populaire, Caisse d’Épargne, Natixis) sold almost all its African banks. BNP Paribas followed suit by selling its subsidiaries in Comoros, Gabon, Mali, Guinea, Burkina Faso and Tunisia, before selling its 54.11%-owned Senegalese subsidiary to the pan-African financial services group SUNU in 2022.
“The rise in political risk in certain African countries, issues of embargoes, corruption, KYC (know your customer), the lack of competent senior executives familiar with local practices, habits and customs that differ significantly from those encountered on other continents, cumbersome IT systems and inadequate governance and the inability to forge the right partnerships to succeed in local digital transformation and mobile banking market positioning, which is vital in Africa, have all precipitated the withdrawal of French banks from the continent”, explains a business intelligence consultant.
Opportunity calls
The prospect of local players taking over the former subsidiaries of French banking groups is, on the whole, viewed positively by market players, for whom this disengagement would represent a unique opportunity to consolidate the financial health and influence of pan-African groups.
“African players today are extremely dynamic and focused on their markets, customers, countries and regions, with a strong propensity to innovate and invest in human capital. This is something that French groups have totally lost sight of on the other side of the Mediterranean. These African players have also understood that the network goes beyond the continent’s borders, by investing in strongholds such as London, Paris, Beijing and Dubai,” stresses this former Société Générale France executive.
For Moroccan groups, this is another opportunity to expand and open up further to the African market. In addition to the strong presence of Bank of Africa, Attijariwafa bank, and the BCP group, market rumors suggest that, in addition to Société Générale Maroc, Moulay Hafid El Alamy would also be interested in taking over the French bank’s shares in its subsidiaries in Côte d’Ivoire, Senegal, Benin and Togo.
If the takeover of Société Générale Maroc is confirmed, there will be only one French-owned bank left in Morocco: BMCI, a subsidiary of the BNP Paribas group, which holds a 66.74% stake. However, according to some African news reports, Zouhair Bennani, founder of the LabelVie group, is interested in acquiring the bank.
When contacted by TelQuel, Benanni said he was “far from this information and its potential origin” and assured us he would speak on the issue when he has “something to reveal.”
Written by Safae Hadri, Edited by Abir Razouk of AngloMedia Group
