Societe Generale Reports Loss in Fourth Quarter
Paris — Société Générale, one of the largest French banks, on Wednesday posted a larger loss than the market had expected and said it would restructure to cut costs and simplify operations.
The bank, based in Paris, reported a fourth-quarter net loss of 476 million euros, or $ 640 million, compared with a year-earlier profit of 100 million euros. Analysts surveyed by Reuters had expected a net loss of about 237 million euros.
Profit was hurt by a charge of 686 million euros as the bank revalued its own debt, an accounting obligation as the market for those securities improved. It also set aside 300 million euros as a provision against legal costs, and it wrote down 380 million euros of goodwill in its investment banking business, mostly on Newedge, the brokerage in which it owns a 50 percent stake.
Without the one-time items, it said, fourth-quarter net income would have been about 537 million euros.
Under Frédéric Oudéa, its chairman and chief executive, Société Générale has been working to emerge from the financial crisis as a leaner institution. It said that between mid-2011 and the end of 2012, it disposed of 16 billion euros of loan portfolio assets from the corporate and investment banking unit, and another 19 billion euros of other assets.
The bank’s restructuring, and an improvement in sentiment in the euro zone economy, have helped to restore its market standing. After a difficult 2011 that was marred by questions about Société Générale’s exposure to Greece, the bank’s shares have rallied, gaining 49 percent over the last year.
The bank also said Wednesday that Philippe Heim would take over as chief financial officer. Mr. Heim replaces Bertrand Badre, who is leaving to take a position as managing director for finance at the World Bank. Jacques Ripoll, the bank’s asset-management chief, it said, “has decided to pursue his career outside the group.”
The new restructuring measures announced on Wednesday include building the bank around three core businesses: French retail banking; international retail banking and financial services; and corporate and investment banking and private banking.
The Société Générale group employs about 160,000 employees around the world, and it was not immediately clear if the announcement of a new organization meant the bank would follow the lead of other large global institutions with a round of layoffs.
“There will be review processes to define the target organizations for each entity in the weeks to come,” the bank said. “The organization proposals will be addressed in the framework of an enhanced employee dialogue in keeping with agreements with trade unions and the procedures for consulting with worker councils.”
Mr. Oudéa said in a statement that the purpose of the changes was “to make our organization more efficient and flexible.”
Société Générale said its Tier 1 capital ratio, a measure of the bank’s ability to withstand financial shocks, stood at 10.7 percent at the end of December, up 1.65 percentage point from a year earlier. The French firm said it expected to attain a Core Tier 1 capital target under the accounting rules known as the Basel III regime of 9 percent to 9.5 percent by the end of 2013.