Societe Generale to cut 1,600 jobs to restore profitability

French banking giant Societe Generale on Tuesday revealed plans to shed 1,600 positions following its latest operational review, starting from the third quarter of 2019 onwards.

In February, France's third-largest bank had already announced that it would seek to cut €500m in costs at its corporate and investment banking arm, known as GBIS, after taking a hit during the fourth quarter as the US-China trade war and political tensions in Europe triggered a big drop in financial markets.

At the time, management also cautioned that even the medium-term financial and regulatory outlook was darker than had been foreseen just one year ago.

Fourth quarter revenues at SocGen fell by 4.8% to €5.927bn with trading revenues at its Global Markets and Investor Services' unit down by 18.7% to €1.093bn in comparison to a year ago.

Severin Cabannes, SocGen’s deputy chief executive and the head of its corporate and investment banking arm, said: "Since early February, we have carried out a review of all the activities of corporate and investment banking. Our goal is to restore the business’ profitability above the cost of capital."

A reorganisation plan released on Tuesday specified that 750 jobs will be cut in France, where all the redundancies will be made on a voluntary basis, with the remaining 850 cuts centred mainly on New York and London, according to reports.

The lender will also close its over-the-counter commodities business and its proprietary trading subsidiary and merge two business units in its finance & advisory arm that cover client relationships, investment banking and financing activities.

To take note of, SocGen chief Frederic Oudea was facing re-election in May.

"The group will concentrate its wholesale business model on its areas of strength where it has sustainable and differentiating competitive advantages," Societe Generale said in a statement.

"The bank's leading position in Europe, the depth of its corporate client portfolio, as well as its global franchises in equity derivatives and structured finance mean it can position itself as a provider of high value-added solutions, drawing on its financial engineering expertise that forms the core of its DNA."

Societe Generale's shares were up 0.38% at €26.62 at 0943 BST.