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French banking giant SocGen to cut 1,000 jobs

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French banking giant SocGen to cut 1,000 jobs
French banking giant Societé General to cut 1,000 jobs worldwide. Photo: Loic Venance/AFP
11:09 CEST+02:00
French banking giant Société Générale revealed on Tuesday it would cut at least 1,000 jobs worldwide, in an effort to find almost €1 billion in savings by 2015. The announcement comes as the bank's first-quarter profit fell by half.

French bank Société Générale reported on Tuesday that first-quarter net profit fell by half to €364 million and said it would save €900 million by 2015 with the loss of more than 1,000 jobs worldwide.

The cost cuts are in addition to cuts of €550 million effected last year.

General manager Jean-Francois Sammarcelli, when asked on French BFM Business radio if the bank expected to shed more than 1,000 jobs, replied that the figure would be substantially higher.

He said that the cuts would include the loss of about 550 jobs at the bank's headquarters in Paris.

The bank employed about 154,000 people throughout the world of whom 60,000 were employed in France, he said.

The price of shares in the banking group rose by 4.0 percent in initial trading, with analysts welcoming the cost-cutting strategy.

In the first three months of the year, net profit fell by half from the equivalent figure last year, owing to exceptional cost factors totalling €488 million.

And the outcome fell short of the net result broadly expected by analysts polled by Dow Jones Newswires who had foreseen about €370 million.

However, net banking income, a key measure of performance by a bank regarding the margin between the cost of taking in deposits and the price of lending them out, fell by 19.4 percent to 5.1 billion euros.

This exceeded the expectations of analysts who had forecast 4.94 billion euros.

The bank said in a statement that it had decided to apply a programme to improve efficiency with three objectives: "Reduce costs and strengthen competitiveness, simplify the way the group functions and to strengthen synergy between the resources used by the different activities of the bank."

The full effect of the programme would be achieved at the end of 2015 when total savings of €1.45 billion would have been made compared with figures at the beginning of 2012, the statement said.

This programme would involve restructuring and investment costs of €600 million.

This would enable the bank to achieve a return on capital employed of 10.0 percent, chief executive Frederic Oudea said.

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