SocGen Sees About 125 French Job Cuts Amid Profit Pressureby
SocGen seeks to counter increasing regulatory expenses
French bank to present job-cutting plan to labor unions
Societe Generale SA said it plans to eliminate about 125 jobs in France, with the deepest cuts at its trading operations, as stricter market regulations squeeze profitability.
France’s second-largest bank by market value seeks to reduce 90 jobs at its trading business in France as well as about 35 positions at its Lyxor asset-management unit, the Paris-based lender said in a statement on Monday. Headcount will be largely cut through voluntary departures, it said.
“Societe Generale needs to adapt its model in order to focus on its core activities and to optimize the use of its scarce resources,” the bank said. “The profitability of market activities in particular is under pressure in some segments.”
Investment banks around the globe are grappling with a slump in fees, with fixed-income revenue seen down 45 percent in the first quarter from a year earlier, RBC Capital said in a note on Monday. Societe Generale said it will have difficulty reaching its profitability target for this year due to regulatory pressure, low interest rates and market turmoil after reporting weaker-than-estimated fourth-quarter earnings.
The shares rose 1 percent to 32.75 euros at 1:32 p.m. in Paris, paring losses this year to about 23 percent. By comparison, Deutsche Bank AG, Europe’s largest investment bank, has decreased 34 percent in that period.
Societe Generale Chief Executive Officer Frederic Oudea said at a conference last month that the bank may speed up cost cuts in businesses including global banking and investor-solutions as regulators toughen scrutiny. The unit, which also houses prime brokerage, asset management and wealth management businesses, makes up 38 percent of the 850 million euros ($966 million) in cost cuts the bank plans to achieve in by 2017.
The French lender said earlier that it plans to eliminate about 2,500 staff at its French consumer-banking unit as part of a wider overhaul to cut costs as more customers switch to online banking services.
The bank said it will submit new plans on job cuts to French labor unions on Monday and that it expects talks with representatives to take place over the next weeks.