(Bloomberg) -- After hours fielding questions from puzzled analysts about his strategy for Societe Generale SA, Slawomir Krupa addressed staff of the French lender in virtual town halls on Monday afternoon.

But if the new chief executive officer had hoped for a more sympathetic audience, he was probably disappointed. 

Employees spooked by the 12% slump in the stock asked how he explained it, according to people who were present. Some questioned whether his plan was ambitious enough, while others were frustrated by the lack of clarity about disposals and job cuts, said the people, asking not to be named because they weren’t authorized to speak. 

“If the market isn’t convinced, it’s difficult for employees to believe,” said Khalid Bel Hadaoui, a union representative at the lender. “We’re now waiting for concrete actions, not just vague announcements.”

Four months in the job, the strategy update that stakeholders had hoped would put the firm on a stronger footing is becoming the first serious test for Krupa. The former investment bank chief, who his known for his direct style, has been given a mandate by the board to revive the stock. But Krupa’s message of slower growth, lower profitability and smaller shareholder returns instead erased more than €2.5 billion in market value in just one day, cementing SocGen’s position as laggard among the large European banks. 

Krupa declined to discuss the share price in the town halls. In a change of tone from his predecessor Frederic Oudea, who sought to console and rally staff, the new CEO used much of his time for what attendees describe as a technical discussion of his plan to strengthen the CET1 ratio. 

Much like he did with investors, Krupa struggled to hit it off with employees. Some said they left the townhall worried about their future, after the CEO refused to give details on unit disposals or where and how he intends to cut costs.

A spokesman for SocGen declined to comment.

Earlier Monday, during the investor day at SocGen’s London headquarters in Canary Wharf, Krupa also declined to comment on the stock’s sudden decline. But while top executives put on a brave face during the presentation, at least one privately conveyed feelings of frustration with the how the day went, according to a person with knowledge of the matter.

What Bloomberg Intelligence Says:

No major strategic revamp nor cost-cutting announcement for SocGen’s investment bank were major disappointments from the investor day ... Value creation in the unit isn’t recognized by the market, and there’s little within the new strategy to change that perception.

- Philip Richards, senior bank analyst

While Krupa stuck to his line during the town halls, analysts started resetting their expectations for the lender. At least three downgraded the stock since Monday. S&P Global Ratings said the plan highlighted SocGen’s “limited growth opportunities compared with peers’.” The decline in the shares has made SocGen the cheapest bank in Europe by a key valuation measure. 

The board of directors remains focused on the stock’s performance over the next months, according to a person familiar with the board’s thinking. Last Friday, when Krupa’s plan was presented and voted on by board members, they agreed that the bank needed to underpromise in order to overdeliver, the person said.

“The new CEO does not want to repeat the past, where SocGen would embed too high revenue growth targets in its plan and then have to play catch-up on the costs because revenues disappointed,”analysts at Jefferies Financial Group Inc. led by Flora Bocahut wrote in a note.


Observers and employees agree that Krupa was in a tight spot ahead of the presentation, with limited strategic options at his disposal. Still, the communication of certain targets was at times awkward, unnecessarily spooking markets, the people said.

Despite the market reaction, Eric Lombard, head of SocGen shareholder Caisse des Depots et Consignation, said he still backs the new CEO. In a press briefing organized by the Association des Journalistes Economiques et Financiers, Lombard said he was reassured by Krupa’s plan, and stressed that the CEO is “taking things with a lot of method and a lot of energy.”

“There is always a period of habituation between a new leader and the market,” he said. “We are in this initial contact phase.”



--With assistance from Macarena Muñoz and Thyagaraju Adinarayan.

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