PARIS • Societe Generale SA (SocGen) is planning jobs cuts at its investment bank to drive down costs after a trading slump in the fourth quarter (4Q), according to people with knowledge of the matter.
The French bank is seeking to trim expenses by at least €100 million (RM467.4 million) annually and potentially by a much higher amount, with cuts focused on its global banking and investor solutions unit, the people said, declining to be identified because the matter is private. The plans — including the extent of the cuts — may be made public as soon as next week, they said.
A spokesman at SocGen declined to comment.
SocGen shares rose 0.3% in early Paris trading yesterday. The stock has fallen about 40% in the past 12 months, falling behind the 27% decline of Europe’s STOXX 600 banking index.
“It makes sense for SocGen to take action on costs,” RBC Capital Markets analysts including Anke Reingen wrote in a note yesterday, estimating that a €400 million cost reduction would help improve SocGen’s 2020 earnings by about 6%.
SocGen is seeking to bolster profitability after warning last month that revenue at its key global-markets business slumped about 20% in the final three months of the year because of reduced client activity. The declines are complicating the 2020 growth strategy of CEO Frederic Oudea, who’s seeking to restore investor confidence after paying billions in fines and the surprise departure of a top lieutenant last year.
The French bank will likely seek to preserve its traditional trading strengths in equity derivatives and structured products, with reductions potentially coming in less profitable parts of its fixed-income activities, the people said. Decisions on the magnitude and scope of the cuts may come when the bank announces annual results on Feb 7, the people said. — Bloomberg