Abu Dhabi, UAETuesday 25 June 2019

Societe Generale mulls job cuts at its investment bank, sources say

Thousands of jobs could be at stake at its global banking and investor solutions unit

SocGen is seeking to cut 500 million euros of costs and review less profitable investment-banking activities. Reuters
SocGen is seeking to cut 500 million euros of costs and review less profitable investment-banking activities. Reuters

Societe Generale is drawing up plans to cut jobs at its investment bank and find a partner for its cash-equity business in a bid to offset increasing cost pressure from regulation, people familiar with the matter said.

The bank could cut hundreds or even thousands of jobs at its global banking and investor solutions unit, including roles in support functions such as finance and human resources, one person familiar with the situation said.

SocGen is still weighing up which parts of the business would bear the reductions, the person added.

Societe Generale declined to comment.

The GBIS unit has more than 20,000 employees. One of SocGen’s main French labor unions said February 8 that the bank is bracing for “important” cuts to trading jobs. Chief executive Frederic Oudea has said it’s too soon to comment on any headcount decisions.

SocGen rose as much as 2.7 per cent in Paris trading and was up 2.6 per cent at 25.63 euros as of 10:01am. Still, the stock has fallen about 8 per cent this year, missing the rebound of Europe’s Stoxx 600 banking index.

The Paris-based group is seeking to cut 500 million euros (Dh2.08 billion) of costs and review less profitable investment-banking activities after a gruelling fourth quarter. The organisation said earlier this month that the reductions would focus on some fixed-income and currencies activities.

Mr Oudea reorganised his top management and hired senior traders from Bank of America Corporation last year to help reboot the global-markets business after the shock departure of investment-banking boss Didier Valet. Deputy chief executive Severin Cabannes is now in charge of the GBIS unit and is readjusting a business plan that was crafted under Valet in 2017 when economic and market conditions were better.

SocGen’s board last year took the step of proposing a new four-year term for the chief executive, and shareholders will vote on it at their annual meeting in May.

The bank has so far resisted the trend in France to hive off cash equity and research. However, it is now considering options to set up a joint venture, the person said.

Finding a partner for the stock brokerage business may take weeks or months, and keeping it within the group would be the default solution, the person said.

Several new ventures in equity brokerage could serve as a blueprint. Kepler Cheuvreux has partnerships with European banks including Credit Agricole to secure distribution of its research. Franco-German banking group Oddo BHF struck a deal with Natixis SA in 2017, which left French equity brokerage and research activities with the former, while the latter took on capital markets.

The reshuffles came as the European Union’s MiFID II directive forces brokerages to charge clients separately for research and trading, leaving smaller players under pressure to consolidate.

Updated: February 22, 2019 03:18 PM