Introduction

Société Générale has been present in China since 1981, mainly in corporate and investment banking (via 5 branches) and more recently in fund management (Fortune SGAM) and equipment leasing and fleet management (SGLR). In 2007, the Group decided to seize on the opportunity provided by the Chinese authorities in 2006 to create a fully-owned subsidiary designed to eventually offer the same services as local banks.

In September 2008, the subsidiary Société Générale (China) Ltd. was created in Beijing and allocated a capital of RMB 4 billion (around EUR 400 million). It houses four business lines, which all use the same pooled support functions. The first branch for individual clients was opened in Beijing in November 2008.

The international retail banking teams (Commercial and Personal Banking), which were gradually formed as of August 2007, now total 267 employees, 46 at the head office in Beijing and 221 across the seven points of sale open to customers (2 in Beijing, 2 in Shanghai and one in the three other towns where SG (China) is present: Guangzhou, Tianjin and Wuhan).

Business development

When the subsidiary was created in September 2008, none of our branches were able to carry out transactions in renminbi (RMB (or CNY)) with individual Chinese customers, who make up the lion’s share of the retail banking market. Even though all the branches could, up until now, carry out local currency transactions with businesses, only the Beijing and Shanghai branches were allowed to carry out operations in RMB with individual overseas customers and businesses (both local and foreign) thanks to their “corporate RMB” licence.

In the first half of 2009, after individual inspections by the local Banking Commissions, the Guangzhou, Tianjin and Wuhan branches all obtained the "Corporate RMB" licence.

It was only in August 2009, after a very thorough onsite inspection that included interviews with the bank’s senior executives and written tests for employees, that the national Banking Commission authorised the subsidiary to request the local inspections required for carrying out RMB operations with Chinese individual customers ("RMB Retail" licence).

The inspection of the Beijing branch went without a hitch and, on September 27 2009, it was authorised to carry out RMB operations with Chinese individual customers. The Shanghai and Guangzhou branches have also been visited for local inspections and are waiting for the final decision from the local Banking Commissions. The inspections of the Wuhan and Tianjin branches will take place in 2010.

Outlook

The "RMB Retail" licence in Beijing means that Société Générale has entered the privileged circle of international banks that are allowed to carry out local currency operations not only with businesses but also with Chinese individual customers. Société Générale is the first French bank to obtain this licence, which means it can now target the significant local private savings market and broaden its product offering, mainly via the issuance of local debit cards, which will require an authorisation that will be submitted at the end of 2009.

Once all the branches have obtained their "RMB Retail" licence, our bank will be in a position to step up the development of its loans and deposits for individuals and reinforce its image in China of a universal bank that is capable of meeting the key requirements of Chinese individual and business customers.