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Societe Generale profits hit by Greek debt

French banking giant Societe Generale said on Wednesday its second-quarter net profit slumped 31 percent as it took a charge for its exposure to Greek debt and warned of a difficult 2012.

The warning on its 2012 outlook sparked a sharp drop in the share price, with Societe Generale stock slumping nearly 7.0 percent at the opening in Paris where the wider market was down 1.16 percent.

The bank said its three months to June net profit came to €747 million ($1.07 billion) after it set aside 395 million euros for losses on its holdings of Greek government bond.

If the Greek provision is excluded, the results were roughly in line with analyst forecasts from Dow Jones Newswires for a net profit of 933 million euros.

Societe Generale also downgraded its outlook, saying that its forecast for a 2012 net profit of 6.0 billion euros “looks difficult to achieve.”

Societe Generale said that despite concerns over the 2012 outlook, it remained confident of achieving a 9.0 percent core capital level by 2013.

The new Basel III accords on banking sector reserves fixes a core capital requirement of 7.0 percent but some banks may have to set aside up to 2.5 percentage points more depending on their size and influence in the financial system.

Societe Generale said most units posted an improved performance, with its investment banking division contribution to the results up 9.0 percent on the back of a sharp increase of 72 percent in stocks trading activity.

Net banking income, however slipped 2.6 percent to 6.5 billion euros.

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SOCIÉTÉ GÉNÉRALE

France’s Societe Generale to cut 1,500 jobs: report

French banking group Societe Generale is planning to cut 1,500 positions in its BFI corporate and investment banking arm, Le Figaro newspaper reported on Saturday.

France's Societe Generale to cut 1,500 jobs: report
Societe Generale CEO Frederic Oudea at the Climate Finance Day and Global Roundtable in Paris on November 26, 2018. Photo: ERIC PIERMONT / AFP
Citing internal bank documents, the paper said the bank was looking at two scenarios, both of which envisage 1,500 job cuts worldwide, with around 700 of them in France.
 
The company said in a statement on Saturday it was still reviewing activities in its corporate and investor client business so it was not possible to comment on the impact on jobs.
 
“We have an ongoing dialogue with our unions and will consult them on our projects and their impact as soon as the review is completed in the coming weeks,” the bank said.
 
French CGT union representative Philippe Fournil could not confirm the information, but said the bank's management had on Thursday indicated it was still reviewing activities within that business.