SocGen launches a cost-cutting plan in a bid to free EUR 4 bln

‘Le Figaro’ affirms employees will be let out in Romania, BRD subsidiary does not confirm.

Societe Generale stated on Monday that it would accelerate asset disposals and launch a cost-cutting plan in a bid to free EUR 4 billion worth of capital by 2013 failed to reassure markets, with its shares pummeled by expectations of a downgrade from Moody’s Investors Service, ‘Wall Street Journal’ informs.

Monday morning, its shares were down 9.8 per cent at EUR 15.73, slashing its market value to around EUR 12 billion. It had been hard hit by worries over its ability to cope with the deepening euro-zone debt crisis in recent weeks. Even before Monday’s sharp decline its shares had shed almost half their market value since August 1. Moody’s may lower its French bank ratings this week because of the possible financial impact from their holdings of Greek government debt, people close to the matter said over the weekend. The bank’s Chief Executive Frederic Oudea downplayed the possible downgrade as he said such a move by Moody’s would actually bring its rating in line with those of the other main agencies.

In response to repeated questions from reporters, Oudea – who is currently the president of the French banking federation – said there were no discussions between the government and French banks over possible financial support. He also said there were no customer withdrawals from Societe Generale. He insisted the bank’s exposure to sovereign debt in Greece, Ireland, Italy, Portugal and Spain was relatively light, saying it was “low, declining and manageable.” Exposure in those countries totalled EUR4.3 billion on Sept. 9 and is “well below the exposure of peers,” it said. Oudea said Sunday evening that French banks would survive if Greece didn’t pay back its debt. He added that the banks have the capacity to absorb a loss triggered by an Italian default, though he said it seems a “very unlikely scenario.” He said Monday that Societe Generale has EUR1.5 billion worth of exposure to Italy. Moreover, according with ‘Le Figaro’, Societe Generale will discharge employees from Romania, Russia, Poland and Egipt. BRD subsidiary’s officials said that at the time being they know nothing about this plan which includes Romania, informs.

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