Pair Trade: Long SocGen - Short Crédit Agricole Wednesday, October 10th 2012Company Description Investment Case Societe Generale (GLE FP) – Core Tier I improved by 50bp to 9.9% at the end of Q2, due to retained earnings, strict control of RWAs and balance sheet deleveraging. CIB deleveraging is progressing. Refinancing needs for 2012 have been more than covered. SocGen announced in August that it agreed to sell TCW Carlyle and TCW management. This should release some Basel 3 capital in 2013. Additionally, it confirms:Societe Generale (GLE FP) Management´s commitment to deleveraging;Last Price (€) 22.97 Execute business disposals and simplify its set up;YTD Change 33.33% Focus resources on core activities.Mkt Cap (€bn) 17.899Credit Agricole (ACA FP) Management delivery on the announced deleveraging plan and theLast Price (€) 5.771 reduction in legacy asset exposures should improve investorYTD Change 32.36% sentiment and release capital. However, profitability will probablyMkt Cap (€) 14.416 remain low in the next few years. The bank continues to reduce itsSource: Bloomberg liquidity needs.Analysts Recommendations: Since August, Credit Agricole (ACA FP) has risen due to increased market focus on the probably lower than expected exit cost to disposing its Greek unit Emporiki bank. The management said that a deal should be signed “within weeks”. After that, Credit Agricole will become more plain vanilla. Capital seems to be below peers and should probably remain a hurdle. The bank has been able to reduce its loan to deposit ratio at Q2 (113%). Stated core Tier I was 9.6% (Q1 2012: 9.4%). RWAs down 2% QoQ. Group deposits +2% YTD.Source: Bloomberg The Societe Generale/Credit Agricole has a current ratio of 3.98. We’llMarket Multiples define as our target 4.40. We would use 3.80 as our stop loss level. P/B 2013 ROE 2013 DY 2013 Est. Est. Est. Technical CommentSocGen 0.38 6.14% 3.87%Credit Agricole 0.31 5.49% 4.31%Source: BloombergNext Report dateSocGen Q3 Results November 8thCredit Agricole Q3 Results November 9thSource: Corporate Websiteswww.fincor.ptwww.facebook.com/FincorAnnouncement: Fincor—Sociedade Corretora, S.A. provides services of reception, execution, and transmission of orders. The contents men-tioned in this document do not constitute (nor should they be interpreted as to form) any kind of counselling, or investment recommendation, or arecord of our trading prices, or an offer or solicitation to trade in any financial instrument. Fincor—Sociedade Corretora, S.A. Will not accept anyresponsibility resulting from any use referring to said content or about any resulting effect that could have occurred.