Picture: NATHAN LAINE/BLOOMBERG
Picture: NATHAN LAINE/BLOOMBERG

Paris  —  French bank Societe Generale overhauled its top ranks on Tuesday, announcing the departure of two deputy chief executives after its worst quarterly performance since the global financial crisis.

France's third-largest bank surprised investors with a €1.26bn quarterly loss on Monday, its worst since rogue trader Jerome Kerviel left a gaping hole in its accounts in 2008.

The latest loss has cranked up the pressure on CEO Frederic Oudea to turn the bank around and he has pledged to cut the bank's trading risk following a torrid quarter for markets triggered by the Covid-19 pandemic.

The bank is due to present a new strategy in the first half of next year and Oudea said that the management changes meant the bank could crack on with its preparations with a new generation of senior leaders.

“The goal is to prepare the strategic plan without delay,” he said.

“It seemed important to me to put together a team for the next few years both to confirm the rebound in the group's performance in the short term and, above all, to build for the future. It is a move that was long prepared and organised.”

French banks have been hit by big losses in equity derivatives during the health crisis, putting them on the back foot compared with most global rivals who have profited from a surge in trading volumes.

Rival French lender Natixis said on Monday it was axing CEO  Francois Riahi after its second quarterly loss in a row and bringing in the finance chief from its parent company BPCE to overhaul its investment banking strategy.

Equity derivatives have traditionally been a source of pride for the French finance industry but unprecedented market volatility sparked by Covid-19 meant that equity trading revenues were almost wiped out in the first half of the year.

New generation

In Tuesday's reshuffle, SocGen cut the number of deputy chief executive roles to two from four and said it was creating deputy GM  roles for a new generation of leaders.

Deputy CEO Severin Cabannes, who oversees the investment bank, will retire at the end of 2020 while Philippe Heim, who was in charge of international markets, is leaving his deputy CEO role with immediate effect.

Slawomir Krupa, head of global banking and investor solutions for the bank's North American operations, will become deputy GM and head of global banking and investor solutions globally from 2021.

The wide-ranging changes will also see Philippe Aymerich, deputy CEO and head of the French retail banking divisions, take on responsibility for all of the lender's international retail banking and consumer credit activities.

Oudea, whose mandate expires in 2023, said the changes did not mean there had been any acceleration in the bank's succession planning.

“We decided to promote a generation of leaders who have a strong sense of execution and have shown it in their careers,” Oudea said. “There is no acceleration (of the succession plan), it is an organised, structured preparation”.

Oudea also said the bank needed to create more synergies between its retail banking activities and that required significant investment.

“The idea is to set up a structure that allows us to gradually pool the maximum amount of resources,” Oudea said.

The bank said on Monday that a review of its structured products business that suffered during the Covid-19 crisis would lead to a drop in revenue of between €200m to €250m.

Oudea said that its markets division, which includes structured products trading, was likely to contribute a smaller proportion of its investment banking revenue in the future while there would be some growth in financing and transaction banking.

Reuters 

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