ReportWire

Tag: Societe Generale SA

  • ‘Trader justice’: Ex-SocGen trader fired for risky bets claims he was made a ‘scapegoat’

    ‘Trader justice’: Ex-SocGen trader fired for risky bets claims he was made a ‘scapegoat’

    [ad_1]

    A logo outside a Societe Generale SA office building in central Paris, France, on Monday, Feb. 5, 2024. 

    Bloomberg | Bloomberg | Getty Images

    A former Societe Generale trader who was fired for unauthorized risky bets has lambasted the French bank for making him a “scapegoat” and failing to take its share of responsibility for missing the trades.

    Kavish Kataria, who was dismissed from the bank’s Delta One desk last year, said the profits and losses on his trades were reported on a daily basis to superiors on his Hong Kong team as well as those in the Paris head office, while a daily email about the transactions was also sent out.

    “Instead of taking the responsibility of the lapse in their risk system and not identifying the trades at the right time they fired me and terminated my contract,” Kataria said in a LinkedIn post Thursday.

    The comments come after SocGen confirmed earlier this week that Kataria and team head Kevin Ng were dismissed last year after an internal review of their transactions. A SocGen spokesperson declined to comment on the post, but provided a statement on the pair’s dismissal.

    “Our strict control framework has allowed us to identify a one-off trading incident in 2023, which didn’t generate any impact and led to appropriate mending measures,” the statement said.

    Although SocGen did not lose any money from the trades, losses could have spiraled into the hundreds of millions of dollars had there been a market downturn, a person familiar with the matter told the Financial Times.

    Kataria had been dealing in options on Indian indexes, which he was not permitted to do, the person said. However, because most were intraday trades, they were not immediately detected, the FT reported.

    Kataria said the trades were auto-booked and a “daily email was sent to the entire group mentioning the trades have been reconciled.”

    “It’s very easy for other people to say that we were not aware of the trades done by me,” he wrote. “This means either you were not doing your job properly or either you were unfit for the same.”

    Kataria joined the bank in Hong Kong in 2021 and claimed he made $50 million for the desk in the last eight months alone.

    In his LinkedIn post, he called for better regulation after he was dismissed with seven days’ salary and his bonus for the previous year was withheld.

    “Trading Industry is so big but there are no rules or regulations which fight for trader justice,” he said.

    Risk management is a critical area of focus for banks, and SocGen remains scarred by the 4.9 billion euros ($5.2 billion) in losses accrued in 2008 by “rogue trader” Jerome Kerviel, who worked on the same derivatives desk as Kataria.

    The French bank on Friday reported a lower-than-expected 22% slide in first-quarter net income, as profits on equity derivative sales offset weakness at its retail bank and fixed income trading.

    [ad_2]

    Source link

  • Societe Generale’s investment bank limits first-quarter profit plunge

    Societe Generale’s investment bank limits first-quarter profit plunge

    [ad_1]

    French bank Societe Generale reported second quarter results for 2023.

    Chesnot | Getty Images News | Getty Images

    French bank Societe Generale reported a smaller-than-expected 22% slide in first-quarter net income on Friday, as profits on equity derivative sales offset more weakness at its retail bank and in fixed-income trading.

    France’s third-biggest listed lender, whose CEO Slawomir Krupa is seeking to end several years of lackluster performance and trim costs, said group net income over the first three months of the year was 680 million euros ($729.30 million).

    This was down 22% from a year earlier but still beat the 463 million-euro average of 15 analyst estimates compiled by the company.

    Sales slipped 0.4% to 6.65 billion euros, above the 6.46 billion-euro analyst average estimate.

    Helped by euro zone interest rates remaining higher for longer than expected, many European banks have beaten expectations for the first-quarter, and some have raised profit targets for the year.

    French banks including SocGen have not benefited as much from the rise in rates because of the high cost of deposits in the country. Their shares have underperformed, although analysts expect the lenders to do better when rates fall.

    SocGen’s investment banking division saw its earnings jump 26.4% to 690 million euros, beating forecasts, while revenues weakened 5.1% to 2.62 billion euros for the quarter.

    Equity derivatives sales, an area where SocGen has historically been strong, did well, the bank said, as did corporate financing services and its advisory business.

    Hedging policy

    This offset a 17% fall in sales from trading in fixed income and currencies, underperforming the average of Wall Street firms and French rival BNP Paribas. Deutsche Bank delivered a 7% rise in fixed income and currencies trading revenue.

    SocGen said it continued to suffer from a costly hedging policy aimed at protecting the bank against low rates but which backfired. It cost SocGen 300 million euros in the first quarter, on top of 1.6 billion euros in 2023.

    The bank no longer reports numbers for its French retail activities, more crucial to its earnings than for BNP Paribas, as a standalone business.

    SocGen said the transfer from sight deposits to regulated savings account with a fixed interest rate weighed on its results.

    According to a recent study by UBS, French deposits were the most expensive in Europe when rates were negative. But they increased in cost just as quickly as the European average when rates and inflation rose.

    SocGen stock price evolution has trailed peers over the last three years, with shares up 9%, compared with a rise of 26% for BNP and 13.5% for Credit Agricole. The basket of STOXX Europe 600 banks has risen by 55% over the period.

    Krupa, who took over just a year ago, disappointed investors last September by putting off a key profitability target by a year, amid stagnating sales, until 2026.

    He has pledged to revive shares by trimming costs and delivering on targets, while selling non-core assets and investing to deploy its online bank BoursoBank and its expanded car-leasing listed group Ayvens.

    [ad_2]

    Source link

  • Societe Generale posts sharp profit drop as net banking income slides

    Societe Generale posts sharp profit drop as net banking income slides

    [ad_1]

    A logo outside a Societe Generale SA bank branch in Paris, France.

    Bloomberg | Bloomberg | Getty Images

    Societe Generale on Thursday reported a sharp decline in fourth-quarter net profit on the back of weaker net banking income, but launched a new 280 million euro ($302 million) share buyback program.

    The French lender posted a group net income of 430 million euros, slightly above a consensus analyst forecast of 404 million euros, according to LSEG data, but well below the 1.07 billion euros recorded for the final quarter of 2022. It comes after the bank posted posted a group net income of 295 million euros for the third quarter, as resilient investment bank performance offset a sharp downturn in its French retail business.

    Thursday’s result took France’s third-largest listed bank’s annual net profit to 2.49 billion euros, slightly above analyst expectations of 2.15 billion euros.

    However, quarterly net banking revenue dropped 9.9% year-on-year to 5.96 billion euros, which the bank attributed largely to a decline in net interest income in French retail, and its private banking and insurance division, along with the negative impacts from unwinding hedges.

    SocGen announced that it would be proposing a cash dividend to shareholders of 90 cents per share, and launching a 280 million euro share buyback, equivalent to 35 cents per share.

    Other key figures the bank reported included its CET1 ratio, which sat at 13.1% to end the year, its reported return on tangible equity for the fourth quarter of 1.7%, and a cost-to-income ratio of 78.3%.

    Group CEO Slawomir Krupa said 2023 was “a year of transition and transformation” for the bank, which is targeting revenue growth of 5% or above in 2024.

    “The exceptional momentum of BoursoBank, the strength of our Global Banking and Investor Solutions franchises, the performance of our international banking activities across all regions, plus the capacity of our new bank in France and Ayvens to implement unprecedented transformations are all strong proof points on our ability to execute at a high level,” Krupa said in a statement.

    “At the same time, while 2023 was negatively affected by a sharp decrease in net interest income in French Retail Banking and the elevated cost of integrating LeasePlan, it was also characterised by disciplined management of costs, risks and capital.”

    Online and mobile banking subsidiary BoursoBank was a particular highlight for the Soc Gen, posting a record quarter for new client acquisitions at 566,000 compared to a year ago. It takes BoursoBank’s total clients to 5.9 million by the end of 2023.

    [ad_2]

    Source link

  • Societe Generale returns to profit, but comes under pressure in its home market

    Societe Generale returns to profit, but comes under pressure in its home market

    [ad_1]

    French bank Societe Generale reported second quarter results for 2023.

    Chesnot | Getty Images News | Getty Images

    Societe Generale returned to profit in the second quarter of this year, but lower revenues in France and broader global banking challenges dragged down its performance.

    The bank posted a net income of 900 million euros ($983.6 million). That’s more than analysts expected, and a lot higher than the 1.5 billion euro loss posted in the second quarter of 2022, when the bank exited from Russia.

    It was helped by a lower cost of risk (provisions set aside for failed loans), which came in at 12 basis points, or 166 million euros.

    However, revenues in French retail banking dropped by 13.6% from a year ago, off the back of lower net interest margins — a crucial indicator of banks’ profitability.

    Revenues in the global banking division fell by 7.3% on lower volumes and weaker volatility. Fixed income and currencies (FIC) activities were down by 18.4%, “amid less conducive market conditions due to weaker interest rate and currency volatility,” the bank sad in a statement.

    The French lender also joined other peers this quarter in announcing a share buyback program for around 440 million euros.

    Slawomir Krupa, the group’s chief executive officer, said in a statement: “During the quarter, commercial activity was good in most businesses. Group revenues contracted due to the decline in the net interest margin in France and in market activities’ revenues against a backdrop of gradual normalisation after some particularly favourable years.”

    “The cost of risk was very low, reflecting the quality of our origination and our loan portfolio,” he added.

    Here are other highlights for the quarter:

    • Revenues (or net banking income) dropped by 8.9% from a year ago to 6.3 billion euros.
    • Operating expenses rose by 2.7% from a year ago to 4.4 billion euros.
    • CET 1 ratio, a measure of bank solvency, stood at 13.1%.
    • ROTE (return on tangible equity) increased to 5.6% from -13.7% a year ago.

    [ad_2]

    Source link

  • East Coast mayors call for more office-to-apartment conversions

    East Coast mayors call for more office-to-apartment conversions

    [ad_1]

    Mayors in cities across the U.S. want to loosen rules that can slow the pace of office-to-residential conversions. In some instances, cities have offered generous tax abatements to developers who build new housing.

    “We have a great opportunity to change the uses in the downtown,” said Washington, DC, Mayor Muriel Bowser at a December 2022 news conference in support of her housing budget proposals.

    “It’s absolutely a budget gimmick” said Erica Williams, executive director at the DC Fiscal Policy Institute, referring to Bowser’s 2023 proposal to increase the downtown developer tax break. “We fully support the idea that some of these buildings could be turned into residential properties or into mixed-use properties, but that we don’t necessarily need to subsidize that.”

    In New York City, a task force of planners assembled by Mayor Eric Adams is studying the effects of zoning changes, and possible abatements for developers who include affordable units in conversions.

    Cities like Philadelphia have previously embraced these policies to revitalize their downtowns. In Philadelphia, homeowners and investors received more than $1 billion in tax breaks for their renovation projects.

    A small collective of developers have taken on this challenging slice of the real estate business. Since 2000, 498 buildings have been converted in the U.S., creating 49,390 new housing units through the final quarter of 2022, according to real estate services firm CBRE.

    Prominent investors Societe Generale and KKR have worked with developers like Philadelphia-based Post Brothers to finance institutional-scale office conversions in expensive central business districts.

    “Capital has gotten much more limited,” said Michael Pestronk, CEO of Post Brothers. “We’re able to get financing today. … It is a lot more expensive than it was a year ago.”

    Many experts believe local governments will alter zoning laws and building codes to make these conversions easier over the years.

    “Our rules are in the way, and we need to fix that,” said Dan Garodnick, director of New York City’s Department of City Planning.

    Watch the video above to learn how cities are getting developers to convert more offices into apartments.

    [ad_2]

    Source link

  • CNBC Daily Open: Deutsche Bank is not Credit Suisse

    CNBC Daily Open: Deutsche Bank is not Credit Suisse

    [ad_1]

    A Deutsche Bank AG branch in the financial district of Frankfurt, Germany, on Friday, May 6, 2022.

    Alex Kraus | Bloomberg | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    Deutsche Bank is the latest bank to suffer a panic-driven sell-off. But analysts said it’s an irrational move by markets.

    What you need to know today

    • U.S. markets edged higher Friday, shrugging off renewed fears of the banking crisis spreading in Europe. But Europe’s Stoxx 600 closed 1.4% lower, weighed down by a 3.8% drop in banks. Deutsche Bank aside, Societe Generale lost 6.13%, Barclays tumbled 4.21% and BNP Paribas dropped 5.27%.
    • International Monetary Fund chief Kristalina Georgieva said recent bank collapses have increased risks to financial stability. But China’s economic rebound may boost the world economy, Georgieva added. Every 1 percentage point increase in China’s GDP adds 0.3 percentage point in the GDP of other Asian economies, according to IMF estimates.
    • PRO Several important economic data points will be released this week: personal consumption expenditures, consumer sentiment and home sales. But concerns about the banking system will likely dominate markets and cause continued volatility.

    The bottom line

    Now that central banks worldwide have made their interest rate decisions, markets are turning their attention back to the banking sector. In today’s heightened atmosphere, however, prudence can quickly — and arbitrarily — tip over into paranoia.

    Deutsche Bank appears to be the latest victim of the market’s panic. On Friday, after the price of its credit default swaps rose to its highest since 2018, investors sparked a sell-off in the German bank.

    The move is mostly irrational, according to analysts. Deutsche Bank is not another Credit Suisse in two key aspects.

    First, have a look at their fourth-quarter reports. Deutsche Bank reported a 1.8-billion-euro ($1.98 billion) net profit, giving it an annual net income for 2022 of 5 billion euros. By contrast, Credit Suisse had a fourth-quarter loss of 1.4 billion Swiss francs ($1.51 billion), bringing it to a full-year loss of 7.3 billion Swiss francs. The difference between the two European banks couldn’t be starker.

    Second, Deutsche Bank’s liquidity coverage ratio was 142% at the end of 2022, meaning the bank had more than enough liquid assets to cover a sudden outflow of cash for 30 days. On the other hand, Credit Suisse disclosed it had to use “liquidity buffers” in 2022 as the Swiss bank fell below regulatory requirements of liquidity.

    Research firm Autonomous, a subsidiary of AllianceBernstein, was so confident in Deutsche Bank that it issued a research note stating: “We have no concerns about Deutsche’s viability or asset marks. To be crystal clear — Deutsche is NOT the next Credit Suisse.”

    While the Deutsche Bank episode reverberated through Europe markets, U.S. investors seemed less concerned. In fact, the SPDR S&P Regional Banking ETF gained 3.03% on Friday. Major indexes also rose — not just for the day, but the week. The Dow Jones Industrial Average inched up 0.41%, giving it a 0.4% week-over-week gain. The S&P 500 rose 0.56%, contributing to a 1.4% weekly increase. The Nasdaq Composite added 0.3% to finish the week 1.6% higher.

    It’s an impressive showing given market volatility. Unfortunately, there’s no promise of stability this week. The personal consumption expenditure price index — the inflation reading most important to the Fed — will come out Friday, and it’s “going to be sticky,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. But the banking crisis will continue gripping markets so tightly that they might not care about inflation as much — for better or worse.

    Subscribe here to get this report sent directly to your inbox each morning before markets open.

    [ad_2]

    Source link

  • Deutsche Bank shares slide 9% after sudden spike in the cost of insuring against its default

    Deutsche Bank shares slide 9% after sudden spike in the cost of insuring against its default

    [ad_1]

    A logo stands on display above the headquarters of Deutsche Bank AG at the Aurora Business Park in Moscow, Russia.

    Andrey Rudakov | Bloomberg | Getty Images

    Deutsche Bank shares fell by more than 9% in early trade on Friday following a spike in credit default swaps on Thursday night, as concerns about the stability of European banks persisted.

    The German lender’s shares retreated for a third consecutive day and have now lost more than a fifth of their value so far this month. Credit default swaps — a form of insurance for a company’s bondholders against its default — leapt to 173 basis points on Thursday night from 142 basis points the previous day.

    The emergency rescue of Credit Suisse by UBS, in the wake of the collapse of U.S.-based Silicon Valley Bank, has triggered contagion concern among investors, which was deepened by further monetary policy tightening from the U.S. Federal Reserve on Wednesday.

    Deutsche Bank’s additional tier one (AT1) bonds — an asset class that hit the headlines this week after the controversial writedown of Credit Suisse’s AT1s as part of its rescue deal — also sold off sharply.

    Deutsche led broad declines for major European banking stocks on Friday, with Commerzbank, Credit Suisse, Societe Generale and UBS all falling more than 5%.

    Spillover risk

    Financial regulators and governments have taken action in recent weeks to contain the risk of contagion from the problems exposed at individual lenders, and Moody’s said in a note Wednesday that they should “broadly succeed” in doing so.

    “However, in an uncertain economic environment and with investor confidence remaining fragile, there is a risk that policymakers will be unable to curtail the current turmoil without longer-lasting and potentially severe repercussions within and beyond the banking sector,” the ratings agency’s credit strategy team said.

    “Even before bank stress became evident, we had expected global credit conditions to continue to weaken in 2023 as a result of significantly higher interest rates and lower growth, including recessions in some countries.”

    Moody’s suggested that, as central banks continue their efforts to reel in inflation, the longer that financial conditions remain tight, the greater the risk that “stresses spread beyond the banking sector, unleashing greater financial and economic damage.”

    [ad_2]

    Source link

  • UBS shares fall 5%, Credit Suisse craters 60% after takeover deal

    UBS shares fall 5%, Credit Suisse craters 60% after takeover deal

    [ad_1]

    The logos of Swiss banks Credit Suisse and UBS on March 16, 2023 in Zurich, Switzerland.

    Arnd Wiegmann | Getty Images News | Getty Images

    Shares of Credit Suisse and UBS led losses on the pan-European Stoxx 600 index on Monday morning, shortly after the latter secured a 3 billion Swiss franc ($3.2 billion) “emergency rescue” of its embattled domestic rival.

    Credit Suisse shares collapsed by 60% at around 11:20 a.m. London time (7:20 a.m. ET), while UBS traded 5% lower.

    Europe’s banking index was down nearly 1.8% around the same time, with lenders including ING, Societe Generale and Barclays all falling over 2.7%.

    The declines come shortly after UBS agreed to buy Credit Suisse as part of a cut-price deal in an effort to stem the risk of contagion to the global banking system.

    Swiss authorities and regulators helped to facilitate the deal, announced Sunday, as Credit Suisse teetered on the brink.

    The size of Credit Suisse was a concern for the banking system, as was its global footprint given its multiple international subsidiaries. The 167-year-old bank’s balance sheet is around twice the size of Lehman Brothers’ when it collapsed, at about 530 billion Swiss francs at the end of last year.

    The combined bank will be a massive lender, with more than $5 trillion in total invested assets and “sustainable value opportunities,” UBS said in a release late Sunday.

    The bank’s chairman, Colm Kelleher, said the acquisition was “attractive” for UBS shareholders but clarified that “as far as Credit Suisse is concerned, this is an emergency rescue.”

    “We have structured a transaction which will preserve the value left in the business while limiting our downside exposure,” he added in a statement. “Acquiring Credit Suisse’s capabilities in wealth, asset management and Swiss universal banking will augment UBS’s strategy of growing its capital-light businesses.”

    Neil Shearing, group chief economist at Capital Economics, said a complete takeover of Credit Suisse may have been the best way to end doubts about its viability as a business, but the “devil will be in the details” of the UBS buyout agreement.

    “One issue is that the reported price of $3,25bn (CHF0.5 per share) equates to ~4% of book value, and about 10% of Credit Suisse’s market value at the start of the year,” he highlighted in a note Monday.

    “This suggests that a substantial part of Credit Suisse’s $570bn assets may be either impaired or perceived as being at risk of becoming impaired. This could set in train renewed jitters about the health of banks.”

    [ad_2]

    Source link

  • European banking stocks sink as Silicon Valley Bank jitters spread

    European banking stocks sink as Silicon Valley Bank jitters spread

    [ad_1]

    European banking stocks sold off sharply in early trade Friday as jitters surrounding U.S. bank SVB Financial — which plunged 60% Thursday — spread around the world.

    It followed an announcement by the tech-focused lender of a capital raise to help offset bond sale losses.

    The Euro Stoxx Banks index was on pace for its worst day since June, led by a decline of more-than 8% for Deutsche Bank.

    Societe Generale, HSBC, ING Groep and Commerzbank all fell more than 5%.

    This is a breaking news story and will be updated shortly.

    [ad_2]

    Source link

  • SocGen reports 64% slide in annual profits but beats market expectations

    SocGen reports 64% slide in annual profits but beats market expectations

    [ad_1]

    SocGen reported its latest results Wednesday.

    SAMEER AL-DOUMY | AFP | Getty Images

    Societe Generale on Wednesday reported a 64% drop in annual net profits for 2022, weighed on by lower activity in its domestic banking unit, currency effects and increased operating expenses.

    The French bank said net income came in at 1.16 billion euros ($1.24 billion) for the final quarter of 2022, bringing its annual profit to 2.02 billion euros. In comparison, the bank had posted 5.6 billion euros in net profit at the end of 2021.

    The latest results came in higher-than-expectations. Analysts had estimated a net income of 905 million euros for the quarter and 1.5 billion euros for the full year, according to Refinitiv.

    “The Group is confident of being able to reap the benefit of ongoing projects and business developments, confirms its financial guidance for 2025, and is embarking with determination on 2023, a year of transition in many respects,” CEO Fréderic Oudéa said in a statement.

    Here are other highlights from the results:

    • Revenues rose 8% over the year to 28.1 billion euros.
    • Operating expenses increased by 5.9% over the last 12 months to 18.6 billion euros.
    • CET1 ratio, a measure of bank solvency, stood at 13.5%, versus 13.1% at the end of the third quarter.

    Shares of the French lender are down more than 20% over the last 12 months.

    This is a breaking news story and it is being updated.

    [ad_2]

    Source link