SocGen Falls in Paris as Cheuvreux Cuts Stock to ‘Underperform’

Societe Generale SA, France’s second-largest bank, fell in Paris trading after CA Cheuvreux cut its rating on the stock to “underperform,” citing possible “large negative one-off items” in the fourth quarter.

The lender dropped 2.8 percent to 32.54 euros, valuing the company at 25.4 billion euros ($33.8 billion). The stock has risen about 15 percent this year.

Chief Financial Officer Bertrand Badre told analysts yesterday the bank will have fourth-quarter own-debt charges higher than third-quarter pretax charges of about 600 million euros, according to a note by CA Cheuvreux analyst Cyril Meilland and another note by London-based Credit Suisse Group AG’s analyst Maxence Le Gouvello. Banks book accounting charges or gains tied to the theoretical cost of buying back their own debt as market prices fluctuate.

Societe Generale today confirmed by e-mail that it expects fourth-quarter own-debt charges exceeding 605 million euros “given the significant tightening of bank spreads” in the period. The lender also sees a goodwill depreciation on its stake in Newedge Group SA. It didn’t give an amount.

Newedge is a Paris-based brokerage joint venture between Societe Generale and Credit Agricole SA (ACA), France’s third-largest bank.

Fourth-quarter earnings “are unlikely to be inspiring, and the first part of the year at least will still be a transition period for Societe Generale,” CA Cheuvreux’s Meilland wrote. In corporate and investment banking, the fourth quarter probably saw “some pressure on equity revenue in November and December, even though the start of this year has been better so far,” Meilland wrote.

He estimates that Societe Generale will probably post a net loss of about 300 million euros in the fourth quarter. The bank is scheduled to report earnings on Feb. 13.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at

To contact the editors responsible for this story: Frank Connelly at; Edward Evans at

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