GENERALE BANK (Générale de Banque)

1822–1965

Incorpoated: 1934 as Banque de la Société Générale de Belgique

Employees: 16,367

Assets: BFr 2.33 trillion (US$62.42 billion)

Stock Index: Brussels

Generale Bank (known as Générale de Banque in French-speaking countries) is Belgium's largest bank, consisting of over 1,000 branches in Belgium and maintaining operations in 40 countries worldwide. Although the bank in its present form is the product of a 1965 merger between Banque de la Société Générale de Belgique, Société Belge de Banque, and Banque d'Anvers/Bank van Antwerpen, Generale Bank (GB) can trace its origins back to 1822. In that year the Algemeene Nederlandsche Maatschappij ter begunstiging van de Volksvlijt, or the General Company of the Netherlands for National Industry, was created to serve the financial needs of the southern Netherlands, united with Holland by the Congress of Vienna. In addition to being the world's first all-purpose bank, the General Company was the government cashier and the official issuer of banknotes for the Belgian provinces of the United Netherlands. During the 1820s the company established 20 branches throughout the Belgian provinces.

Société Générale de Belgique, the holding company formerly related to SGB, still controlled 22% of the bank's assets in 1975.

1830–1935

In 1830, upon the proclamation of the independent Kingdom of Belgium, the bank changed its name to Société Générale pour favoriser l'Industrie nationale, continuing its services and adding savings banks in the towns where it had established itself. Also in the 1830s, two subsidiaries were added to the holdings of Société Générale (SG). Although those particular subsidiaries did not survive past 1848, the trend of growth and acquisition was set. Société Générale continued to be the issuer of banknotes for the Belgian kingdom until the creation of the National Bank of Belgium in 1850. During the 1850s and 1860s SG developed into what is generally considered to be the world's first joint-stock bank and was a forerunner of the modern investment company. SG accomplished this by making the assets of smaller depositors available for investment in large financial ventures. The bank served as a model for French joint-stock companies such as Credit Mobilier, which flourished during Napoleon III's Second Empire, financing much of the rebuilding of Paris of that period. As SG grew in the latter half of the 19th century, to 2,379 accounts in 1899 from 119 in 1866, it invested heavily in Russian mines and railroads as well as the increasing colonial activities of the European powers. In 1902 SG launched its foreign operations with the incorporation of the Banque Sino-Belge, in Shanghai. Shortly thereafter, the Banque Sino-Belge opened branches in Tien Tsin, Beijing, London, Paris, and Cairo. SG also helped establish Banque du Congo Belge (now Banque Belgo-Zairoise) in Belgian Congo and Banque Italo-Belge (now Banque Europ&eacute-ne pour l'Amerique Latine) in South America. In 1905 the name of the bank was officially changed to Société Générale de Belgique. In 1913 Banque Sino-Belge became an official subsidiary of SG, expanding its foreign operations and taking the name Banque Belge pour l'Etranger.

During World War I Société Générale temporarily moved the head office to its London branch because of the German occupation of Belgium. In 1914 the Germans prohibited the National Bank of Belgium from issuing banknotes and SG undertook this function for the duration of the war, issuing approximately two billion Belgian francs. SG ran afoul of the German authorities for refusing to exchange their German marks (which were legal tender in occupied Belgium) for credits with German banks. The Germans threatened to close SG's doors, but instead seized the German money. SG was finally convinced to allow its circulation.

Between wars SG continued its expansion, founding Banque Générale du Luxembourg. Banque Belge pour L'Etranger also grew, opening new branches in New York, Istanbul, and Hong Kong, among other cities. In addition, SG had banking interests in Portugal, Spain, and much of Eastern Europe. The year before its 100th anniversary, in 1922, SG's books showed credits amounting to BFr 4.1 billion and debits of BFr 2.1 billion.

The losses that financial institutions suffered during the Depression led to banking reform in Belgium during the 1930s. Reform was initiated mainly to protect small depositors and investors who during the Depression had often watched helplessly as uninsured assets melted away. In August, 1934 mixed banks were outlawed and had to be separated into financial societies and deposit banks. Thereafter only certain rigidly defined types of institutions were entitled to use the word "bank" in their names. "The name bank," the decree read, "is reserved for those enterprises which usually collect deposits payable on demand or within no more than two years, so as to use them on their own account." Also, banks were enjoined from acquiring stocks or shares of any kind. In practice, however, this prohibition was filled with loopholes and Belgian banks still hold stocks, albeit to a much lesser degree than previously. In 1935 the Belgian Banking Commission was created to oversee the banking industry in Belgium. The commission was placed under the authority of the minister of finance, rendering the banks more accountable to government.

In accordance with the royal decree of August 1934, Société Générale de Belgique was split into a holding company, which retained the same name, and a bank, called Banque de la Société Générale de Belgique (BSGB). Despite the effects of the Depression and the ensuing government regulation, BSGB emerged in good shape and continued to expand during the 1930s, increasing its assets and adding more offices at home and abroad.

1939–1982

The German invasion and occupation in 1939 severely curtailed BSGB's ability to conduct normal operations. No major innovations or developments occured during the six years hiatus imposed by the war. When the war ended in 1945, BSGB numbered 350 offices throughout the world.

After the treaty of Rome in 1957, which initiated the European Economic Community, BSGB forged a cooperative agreement with the Dutch Amsterdamsche Bank (now Amro Bank) and the German Deutsche Bank. The group was called the "Bachelors Club," alluding to the informal nature of the association, whereby each bank retained managerial autonomy. In 1963 this group was joined by the British Midland Bank and was renamed the European Advisory Committee. In 1970 the group was incorporated in Belgium and operated under the name of European Banks International Company, subsequently adding the French bank Société Générale, the Austrian Creditanstalt Bankverein, and the Italian Banca Commerciale Italiana to the fold. The committee also sought transatlantic connections, founding the European-American Banking Corporation in New York in 1968. In the Belgian Congo, the kingdom's colonial jewel, BSGB's affiliate maintained operations after the Congo became independent in 1960, although the company split into two banks, one operating under Belgian law and the other under Congolese. In Egypt, on the other hand, the Banque Belge et Internationale en Egypte was nationalized by the United Arab Republic.

In 1965 BSGB merged with Banque d'Anvers/Bank van Antwerpen and Société Belge de Banque to create Société Générale de Banque. The merger greatly increased the capital resources of the bank as well as adding more facilities and employees. After the merger Société Générale de Banque (SGB) operated 738 offices and employed a staff of almost 11,000.

In the 1970s and 1980s SGB found itself faced with two major challenges: to adapt and prepare itself for the eventual economic integration of Europe, and to solidify and protect its own position in the Belgian banking industry. The trend toward consolidation in Europe placed smaller financial concerns in danger of being swallowed whole, regardless of the protocols drawn up by the Belgian Banking Commission in 1974 to protect the independence of banks whose assets were still partly controlled by holding companies. Société Générale de Belgique, the holding company formerly related to SGB, still controlled 22% of the bank's assets in 1975.

To keep abreast of the technological improvements in banking, SGB modernized and streamlined its services. In 1972 the bank introduced the Eurocheque card, which enabled the holder to perform transactions in Belgium, Luxembourg, and Germany. SGB also joined the Swift network in 1977, which linked the 500 largest banks in 15 countries, and introduced the "Mister Cash" automated teller machine, the first in Belgium. In 1979 SGB also bought shares in Eurocard, making that service available to its customers, and in 1982 the Euro-Traveller's Check was added.

1984–1988

In the mid-1980s SGB displayed a new sensitivity to the banking needs of smaller customers. Commercial banking on a large scale had been the traditional forte of SGB, but the increasing competition and consolidation of the 1980s has made the importance of personal and small-business banking services evident. SGB realized that to remain a competitive force in European banking it would be necessary to take a broader view of its role and cater its services to a more diverse public. This shift in philosophy followed upon the heels of yet another name change in 1985: the bank was thereafter known as Générale de Banque in French-speaking countries and Generale Bank elsewhere.

In 1988 Generale Bank established even closer ties with the Dutch Amsterdam-Rotterdam Bank (Amro), when, following the breakdown of a merger agreement due to technical problems, the two banks agreed to continue to cooperate informally.

Also in 1988 a dramatic year-long takeover battle was waged between Italian financier Carlo de Benedetti and a Franco-Belgian group headed by the French company Financiere de Suez, over Société Générale de Belgique. SGB still held 13.4% of GB and any takeover of SGB would be certain to have an impact on the bank. In the end de Benedetti's hostile bid foundered due to his inability to attract any support from Belgian financial institutions and he agreed to reduce his stake in SGB from 45% to 15%. Financiere de Suez assumed control of the holding company, but Generale Bank maintained its independence. Subsequently GB has sought to increase its capital reserves in order to be in a better position to resist takeover attempts in the future.

GB, as Belgium's largest bank, has a direct role to play in the workings of the country's economy. By the end of 1984 the bank was underwriting nearly a third of Belgium's large public debt. The Belgian government has followed a policy of financing its debt mainly with domestic capital. GB has supported this policy by cooperating in a cartel with the second- and third-largest banks in Belgium, Kredietbank and Bank Bruxelles Lambert, to ensure a supply of domestic capital. GB has also taken a leading role in financing Belgium's exports, a key ingredient in Belgium's continued economic health.