SocGen suffers Q2 losses as restructuring bites
Société Générale’s quarterly profit slumped 42%, hit by Eurozone losses at its investment bank and one-off write-downs on the value of its US and Russian subsidiaries.
SocGen said second quarter net income fell to €433m, well off the €677.9m average estimate in a Reuters poll of analysts. Last year, net income was €747m. Revenue fell 3.6% to €6.27bn, above the poll average of €6.13bn.
The bank said sales from the equities fell 24%, while revenues from fixed income, currencies and commodities fell 5.8%. Profit from SocGen’s domestic retail banking networks fell 6.3% to €360m.
The group is undergoing a radical restructuring, to cut debt and sell assets at its corporate and investment banking division, where profits plunged 70% in the second quarter.
SocGen wrote off €250m on its Russian subsidiary Rosbank, which is being overhauled, and €200m on its US subsidiary, the Los Angeles-based investment manager TCW.
Reuters has reported that TCW is close to being sold. TCW, which manages assets of $127bn, offers a variety of equity, fixed income and alternatives strategies to high net worth and institutional investors. SocGen Group bought a controlling interest in 2001 for $880m, with another 19% over five years dependent on performance.
The value of TCW has been estimated at more than $1bn. Speaking on Reuters Insider television, SocGen deputy chief executive Severin Cabannes refused to say whether TCW was up for sale.
The asset manager has been a buyout target several times since the onset of the crisis. Potential buyers have included US buyout specialist JC Flowers & Co.