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Slick FICC eases SocGen's equities pain

Societe Generale’s head of global banking and investor solutions has welcomed his unit’s “resilient revenue performance” in trading in the first quarter, even as the French bank presses ahead with cost and staff cuts at the division.


SocGen says it will cut costs by another 220 million euros at its investment bank by 2017

The global banking and investor solutions division – which houses its global markets, investor services, financing and advisory, and asset and wealth management operations – posted revenues of €2.4 billion during the first quarter of 2016, 9% lower than a year before.

Net profits fell by 14% to €454 million, according to results published on May 4.

Revenues from global markets and investor services dropped 13% year-on-year, led by a 37% dive in equities revenues which the bank attributed to “investors’ risk aversion”. The drop, in percentage terms, was bigger than those at every other large investment bank to report quarterly results so far, except for French arch-rival BNP Paribas, where revenues from equities and prime services fell 41%.

At SocGen, securities services revenues were also down.

Fixed income, currencies and commodities revenues, however, increased by 17% to €689 million on the back of strong rates and commodities business, setting SocGen apart from almost all of its investment banking rivals, the bulk of which posted double-digit percentage declines in FICC.

The only other bank to report a year-on-year rise in FICC revenues was Barclays, whose macro and credit trading revenues combined increased by 2%.

Didier Valet, SocGen’s head of global banking and investor solutions, told Financial News: “We had a resilient revenue performance [in global markets and investor services]. In a difficult start to the year we have been able to defend our market shares and show the benefit of our balanced business mix.”

Financing and advisory revenues climbed 8.5% to €572 million, which SocGen said was driven by “good momentum on structured financing”, while first-quarter asset and wealth management revenues dropped 21% to €236 million.

Valet said: “Financing and advisory was good in terms of revenue evolution, confirming the strategy we put into place over the last two years to re-inject some capital to develop the franchise.”

SocGen, in its results, also provided further detail on cost-cutting measures initiated during the first quarter that it said would “offset further additional costs of doing business”.

Valet said the measures, which aim to save €220 million and are expected to be completed by 2017, include 128 staff cuts across its markets business in Paris and its Lyxor Asset Management unit, which were announced in April and are being discussed with labour unions.

The bank has also exited its UK government bonds primary dealership business, Valet added, and closed its mortgage-backed securities sales and trading desk in New York.

SocGen’s results were published a day after BNP Paribas posted a 15.5% fall in revenues from corporate and institutional banking division to €2.7 billion, with the bank noting that the quarter had shown a “particularly unfavourable market environment”.

BNP Paribas’ global markets revenues dived 24.4%, which the bank said was due to a “wait-and-see attitude” on the part of investors. Corporate banking revenues were down 6% at €929 million.

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