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Equities dip highlights concern at SocGen

Core division sees sharp fall as peers rise; follows exit of key investment bankers.

A substantial drop in Société Générale’s equities revenue, just as peers posted a big rise, has underlined concerns at its investment bank, after a string of departures.

SocGen said settlements to pending US litigation are getting closer, and might come within days, which analysts say has supported the share price leading up to its first-quarter results on Friday.

However, the results showed group-wide revenues were lower and costs higher than the market expected, with underlying net income falling 13.5% despite cost-of-risk improvements.


Philippe Heim

The nastiest surprise came in global banking and investor solutions (GBIS), which had “a weak start to the year”, admits deputy CEO Philippe Heim, speaking to Euromoney.

Income in fixed income, currencies and commodities (FICC) dropped by almost a third, roughly in line with rivals. However, in equities and prime services – arguably the strongest part of the investment bank – revenues dropped 11% year-on-year.

Analysts had expected equities revenues to be roughly in line with last year, according to Berenberg. Other European banks with large investment banking businesses, including BNP Paribas, UBS and Barclays, have posted double-digit rises in equities.