SocGen posts $640M loss in fourth quarter

Nathan Andrada – Fourth Estate Cooperative Contributor

Paris, France (4E) – Societe Generale SA reported a loss in the fourth quarter following a writedown of its stake in derivatives broker Newedge Group and expenditure of 300 million euros ($403mn) linked to legal fees.

The Paris-based lender said that it posted a net loss of 476mn euros ($640mn) in the quarter ending Dec. 31, lower than the 100mn euro net profit in the previous year, well below analysts’ estimates.

Revenues for the fourth quarter also declined 15 per cent to 5.13bn euros, lower than the 6.01bn during the same period in 2011.

France’s second-largest bank sold assets and cut jobs last year to keep up with tighter global capital and liquidity rules following the denial of access of French banks to European debt markets and U.S. dollar funding.

The quarter saw a rebound in earnings in the company’s corporate and investment-banking business after cutting 1,600 jobs and a shuffling of management in 2012. Costs of the writedowns and litigation, however, offset those gains.

Societe Generale, France’s second-largest publicly listed bank by market capitalization, saw its earnings hit by a 686mn euro accounting charge brought from a rule requiring banks to post a loss if the price of their own debt increases. It is linked to the theoretical cost of a debt buyback while prices in the market fluctuate.

It seeks to reorganize its core businesses by improving its commercial and operational efficiency, according to the company’s statement released Wednesday without providing any cost-cutting guidance.

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