Top French bank reports €1 billion losses due to pandemic

Top French bank Société Générale said on Monday the Covid-19 crisis pushed it into a second quarter loss of more than a billion euros as it was forced to increase loss provisions sharply.

Top French bank reports €1 billion losses due to pandemic
Photo: AFP

The net loss of €1.26 billion for the three months to June compared with a profit of more than €1 billion in the same period a year earlier and follows a loss of 326 million euros in the first quarter.

“This quarter has been sharply impacted by the Covid-19 global health crisis and its economic repercussions,” Société Générale said in a statement.

Net banking income – a bank's core measure of profitability – tumbled 13.5 percent, with all business areas affected except for private banking, asset management and financial and consultation services.

Given the uncertain outlook, the bank said it had put aside 653 million euros to cover losses during the three months.

While most banks have suffered badly in the coronavirus pandemic like Société Générale, its French peer BNP Paribas bucked the trend, managing to report Friday only a slightly lower second quarter net profit of €2.3 billion thanks to a surge in investment banking.

BNP however was also forced to more than double provisions to €1.4 billion.

Société Général said it had been forced into two large write-downs – €700 million on its markets activities, plus another €650 million on certain tax benefits.

Despite the loss and difficult environment, the bank's capital adequacy position remained strong, at 12.5 percent at end-June compared with 12.6 at end March.

Société Générale said the clear challenge now was to adapt to the changes brought by the pandemic.

“If the months of April and May were marked by a reduction in activity in many economies around the world, the rebound since mid-May has been encouraging,” bank chief Frederic Oudea said in the statement.

“Supported by a very solid capital base and a loan book of intrinsic quality, the bank is going to continue the adjustment of its business to the new post-COVID environment, extending notably its cost-cutting efforts,” Oudea said

Société Générale said it had reduced its second quarter costs by 10 percent compared with the 2019 period.

“The group is already working on its 2021-23 strategy around three priority objectives – the importance of the client, social and environmental responsibility, and operational efficiency based on new digital technologies,” Oudea said.

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What is a Livret A and should foreigners living in France open one?

If you open a French bank account, you may also be offered a Livret A saving's account - here's what that means and why it might be a good time to open one, with interest rates expected to rise in February.

What is a Livret A and should foreigners living in France open one?

The Livret A is a standard savings account that is quite popular across France, it is tax-free but has a maximum amount that you can keep in it. It’s quite similar to a cash ISA in the United Kingdom or a standard savings account in the United States.

Due to inflation, Ouest France reported on January 11th that the Banque de France was expected to announce at the end of the week an interest rate increase for Livret A accounts. The rates would rise on February 1st, and likely to levels above three percent, which have not been seen in France since 2009.

Is it advisable to open one?

According to financial advisor Cedric Bernier, who works at Harrison Brook, the Livret A is “the way to start.” Bernier advises that foreigners living in France take this initial step “start saving monthly” with this savings account. 

The financial adviser warned that “the interest rate is really low,” so your funds will not grow by a large amount in this savings account, but “once you have more funds to put aside, you can begin considering other options.”

READ MORE: Everything you need to know about setting up a bank account in France

Bernier recommends keeping three to six months worth of living expenses in an emergency fund with the Livret A. Additionally, for those who arrived in France with a small amount saved that they want to keep liquid, then a Livret A would be a good option. 

If you are looking for investment options or other savings possibilities, you can read more HERE. Keep in mind that possibilities tend to be more limited for Americans in France.

READ MORE: Ask the experts: What do Americans in France need to know about investments and pensions?

Who can open one?

As the Livret A can only be opened under one name, you cannot open another one if you already have one, even if it is with a different bank.

Regarding residency requirements, both non-French residents and French residents alike can hold Livret A accounts. Depending on your bank, the typical minimum deposit amount is €10. You will not have a cheque book or card issued to this account, but transferring sums to and from your current account is a simple process. 

Are there any limits to the Livret A?

Livret A accounts have a maximum amount – as of December 2022, the ceiling was set at €22,950 for individuals and €76,500 for associations, excluding the calculation of capitalised interest.

While you can hold a Livret A and another savings plan like the “Livret de Développement Durable et Solidaire,” you cannot hold more than one of both accounts. You also cannot a Livret A in tandem with a Livret Bleu (Livret B). If you are eligible for a Livret d’Epargne Populaire (LEP), which is means-tested, then you can hold this account at the same time as a Livret A. You can learn more about other saving’s accounts in France HERE.

Americans should keep in mind that US citizens must disclose any non-US bank accounts that held $10,000 or more at any one time in the year – you do this when you file your annual tax return, you have to include a Foreign Bank Account Report (FBAR).

As of December 2022, the interest rate on a Livret A was two percent, with the rate set to be updated next in February 2022, likely to three percent or higher.

How do I open one?

You can set up a Livret A fairly easily by simply contacting your bank and scheduling an appointment. Some banks might allow you to set up the account online, if you already bank there.

When looking online, you can direct your searches on your bank’s website or personal space to “Add an account” (Ajouter un compte) or “Learn about saving’s options” (Décrouvrez nos Comptes Épargne & Livrets).

READ MORE: The best banks for Americans living in France