SocGen unveils cost-cutting move

Societe Generale said it would cut costs and sell assets to free up £3.4bn in fresh capital yesterday, although the surprise move failed to stem a sell-off in French bank shares, driven by fears of a Greek debt default.
By The Newsroom
Published 13th Sep 2011, 10:33 BST

A rapid decline in French bank stock prices since the beginning of the summer has led to speculation that the French state may have to intervene and recapitalise its banks, in the same way as the British and other governments were forced to during the first wave of the financial crisis.

BNP Paribas led the falls, with its shares down 13.5 per cent, while SocGen and Credit Agricole were both more than 9 per cent lower at one stage. They are trading at levels not seen since at least early 2009, when recession stalked much of the developed world.

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Although SocGen chief Frederic Oudea promised fresh asset sales, cost cuts and staff reductions in a bid to fight what he called “extreme” volatility on financial markets, some investors said it mattered little in the current con- text.

“The plan remains of minor interest as long as SocGen is caught in this spiral of negativity on financials,” said Yohan Salleron, fund manager at Mandarine Gestion.