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From Business to Retail to Investment Banking, from Private to Public to State Ownership

Societe Generale was founded as a private bank by a group of industrialists in 1864, with the intention of providing finance for industry and commerce. Its early years were marked by a modest expansion of commercial lending activity and banking locations, but little interest in deposit taking or retail banking services. However, it demonstrated resilience in adverse times, such as France's economic slump in the 1880s. The turn of the century marked the beginning of several new directions, as Societe Generale opened up its capital, actively sought to capture deposits, and launched itself into retail lending. It also established its international presence, principally in London and New York. After the upheavals of World War I, Societe Generale rapidly expanded its domestic branch network, domestic lending, and deposit taking, as well as its shareholder base, surpassing Credit Lyonnais in the mid-1920s to become France's leading bank.

The next phase in Societe Generale's development was dictated by external events as France passed through the 1930s economic downturn, World War II, and the postwar rebuilding effort. In 1945, France's three largest commercial banks were nationalized, putting Societe Generale into state ownership for the next 42 years. While economic policy prerogatives constrained the bank's domestic activities during the recovery years, the postwar revival of international trade presented new opportunities for overseas expansion. The next 30 years were transformative for the banking industry in general and for Societe Generale in particular. ATMs and credit cards reinvented the economics of retail banking, and the breakdown of the Chinese wall between investment and commercial banking opened up securities underwriting and trading business to commercial banks. Societe Generale successfully took advantage of these changes and, in 1987, became the first of France's nationalized banks to be reprivatized.

During the 1990s, the bank's primary strategy was to expand its share of the domestic banking market, which was undergoing a phase of consolidation. In 1997, it met with initial success by acquiring Credit du Nord, but in 1999 suffered a big disappointment when its friendly merger with Banque Paribas was snatched away by a hostile bid from Banque Nationale de Paris (BNP). As a consequence, Societe Generale refocused its growth strategy in the 2000s on three pillars: international retail banking, investment management, and capital markets. The first pillar led to a string of retail banking acquisitions in former Soviet Union countries and Africa. The second pillar resulted in the establishment of a global platform of investor services, including fund management, mutual funds, and securities processing.

The third pillar was entrusted to its newly formed Corporate and Investment Banking (CIB) division, intended to achieve prominence in the markets for debt and equity securities and derivatives.

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