Socgen posts second quarterly loss in a row

PARIS: Societe Generale SA (Socgen) reported €1.26bil on Monday a (Us$1.48bil) second-quarter loss, as it booked a writedown on the value of its trading business that it seeks to revamp.

France’s third-biggest bank by market capitalization said it would reduce the risk profile €200mil of its trading unit in a shift costing to €250mil in lost revenue, though it pledged to maintain its equity structured products business.

Socgen has struggled to perform in businesses it wants to keep, such as equities trading, in a blow to efforts of chief executive Frederic Oudea to boost profitability.

It surprised investors with a first-quarter loss after revenue was wiped out at its equity trading division due to the coronavirus outbreak.

Second-quarter revenue fell 80% in equity trading, and rose 38% in fixed income trading. “The Group will continue to adapt its activities to the new POST-COVID crisis environment, extending in particular the efforts to reduce costs,” Oudea said in a statement.

Socgen’s investment bank has been traditionally weighted toward equities trading than fixed income, and for decades has been a top player in equity derivatives belying its relatively small size. It had an over 10% market share in equity structured products in 2015-2018, Socgen said citing Coalition data.

Socgen said as a result of its review, it would “maintain worldwide leadership in equity structured products” and “derisk” auto-callable products while developing a new generation of products.

Investors facing record-low yields have been increasingly chasing higher returns via complex derivatives, such as auto-callable notes, or autocalls. The activity is lucrative in good times but can leave banks vulnerable to volatility and increased hedging costs during times of crisis.

The bank said a review of the financial trajectory of its Global Markets and Investors Services (GIMS) unit, which includes fixed income and equity trading, led to the impairment

€684mil of related goodwill of and

€650mil. deferred tax assets of