Morgan Stanley, an American banking institution, waded into the deal for Société Générale’s (SG) Moroccan branch by downgrading SG France’s stock rating, as former minister Moulay Hafid Elalamy seeks a controlling stake in the Moroccan branch.
This comes after the bank advised investors to wait before investing in the French banking group’s stock, pending the progress of its asset sales plans in several countries, including Morocco.
The American bank downgraded SG France’s stock rating from “overweight” (surpondérer) to “in-line” (Pondération en ligne), which is a rating based on the weighting of the stock within an investment portfolio comprising at least 30 lines, reducing it from 7% to 3%.
The bank considered the stock of the French banking group to be “neutral” and adjusted its nominal price from 30 euros to 29 euros.
However, the bank noted that the stock’s recent rebounds on the stock exchange indicate its promising investment potential in the future.
Morgan Stanley also revealed its expectations for the value of SG France’s stock to rise based on its asset sales.
The bank stressed that the Common Equity Tier 1 (CET1) ratio, which is the ratio of the bank’s net assets to its risk-weighted assets, is an important point for the French banking group. It expects the ratio to fall below 13% by 2025.
The Saham group is preparing to purchase shares of SG France, which owns a 57% stake in SG Maroc’s capital. The deal is estimated at 8 billion MAD, with half of this amount paid directly by the Moroccan investor and the remaining sum secured through bank loans.
Morgan Stanley predicts the SG to gain between 175 and 291 basis points, or 1.75% to 2.91% if the announced divestments are completed. The bank stressed that this would translate into a 16% increase in profits.
The French group had entered negotiations last year to divest its stakes in its branches in Burkina Faso and Mozambique, as well as projects to divest in the Czech Republic, Morocco, and Romania, as well as its UK-based private bank and its bond-specialized branch, not to mention its German branch “Hanstik Bank.”
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