Société Générale’s announcement last month of a profit warning for its fourth-quarter results was an embarrassment for its senior management, coming just a couple of months after chief executive Frédéric Oudéa said the French bank was well positioned after its recapitalization to build on the recovery in financial markets.
The nature of the bank’s announcement on January 13 – that it would take an expected write-down of €1.4 billion of risky assets, mostly from exposure to CDOs of residential mortgage-backed securities – was a stark reminder to investors that SocGen was one of the European banks with the largest exposure to the US sub-prime crisis. The bank has a remaining portfolio of structured credit assets totalling about €23 billion.
Analysts are also expecting relatively weak results in SocGen’s fixed-income division...
