BNP Paribas has means to save jobs, says auditor

(Full story)

By Lionel Laurent and Matthieu Protard
PARIS, Jan 15 (Reuters) - France's biggest listed bank, BNP Paribas, could save jobs and soften the pain of its investment-banking cutbacks by scrapping its dividend for 2011, according to an auditor's report obtained by Reuters.
BNP is eyeing almost 1,400 staff cuts at its corporate and investment bank as part of a plan to scale back lending in the face of the euro zone debt crisis and to cut hundreds of billions of euros from its balance sheet.
The bank has started to restructure its real-estate lending and its leasing divisions and is planning a global retrenchment in corporate and investment banking (CIB), like many European banks, audit firm Ethix said in a report sent to employee representatives.
However, unlike less financially robust domestic rivals Societe Generale and Credit Agricole, BNP has refused to rule out paying a dividend for 2011. Management has so far only said that it will be reduced.
Such a decision may please shareholders but also means employees will feel the full brunt of the cutbacks, according to Ethix. In keeping with French practice, the audit firm has been appointed to analyse the plan and assist unions in talks with management.
"(Scrapping the dividend) would allow for a less drastic restructuring of the corporate and investment bank and fewer job cuts," said the Ethix report, which estimated 170 French staff could be saved as a result.

Interview with Dexia's CEO on asset-sale progress

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By Lionel Laurent and Julien Ponthus

PARIS | Wed Jan 11, 2012 12:20pm GMT

(Reuters) - Dexia (DEXI.BR) has received over thirty expressions of interest for its asset-management arm and hopes to decide on the sale of its Turkish unit Denizbank by the end of February, the rescued Franco-Belgian bank's chief executive told Reuters on Monday.

The planned asset sales were first announced back in October as part of a bailout plan that would see Dexia broken up and its local-government lending arm merged into a new structure with French state-backed investors.


"Regarding Dexia Asset Management, the process will be launched in a very small number of weeks...We have picked an advisory bank," Pierre Mariani said in an interview. "We have received over thirty (expressions of interest)."

The CEO refused to comment on the reported pull-out of Britain's HSBC (HSBA.L) from the bidding for Denizbank (DENIZ.IS) but said Dexia "should be in a position to make a decision on Denizbank before the end of February."

Investment banks face more pain as SocGen plans emerge

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By Lionel Laurent and Christian Plumb
PARIS, Jan 10 (Reuters) - Societe Generale's freshly overhauled management team is promising more pain for its investment bank unit this year, sounding a deeply pessimistic note likely to be echoed by rivals in France and elsewhere in Europe.

The news that France's second-biggest lender is eyeing a "significant" fall in investment banking revenue for 2012 and has decided to exit or deeply cut several businesses is the latest dollop of pain for investment banks worldwide after businesses such as debt and equity capital markets were hammered last year.

For SocGen's domestic rivals BNP Paribas and Credit Agricole, SocGen's plan to drastically scale back in areas like property and shipping finance and physical energy trading, could offer a roadmap for further retreats on what used to be key business lines.

The French banks' erstwhile empire-building designs in particular have been throttled in recent months by an evaporation in dollar funding as U.S. investors spooked by the euro zone crisis have dashed for the exits.

But the cutbacks at SocGen, which recently brought in a new chief financial officer formerly at rival Credit Agricole and replaced its corporate and investment banking chief, also reflect a grisly environment for investment banks worldwide as once reliable businesses such as stock issuance have dried up.

"Today, they're preparing for an environment in which funding is harder and harder to come by, and it's as a direct result of that that they're restructuring," said Francois Chaulet, a fund manager at Montsegur Finance in Paris, which owns shares in both SocGen and BNP Paribas.
"At the same time, you have markets and an economy which are depressed, and thus there's not very much top-line growth potential for the investment banks."

Secret SocGen memo warns of tough times ahead

(Full story) (exclusive to Reuters)

By Lionel Laurent and Matthieu Protard
PARIS, Jan 9 (Reuters) - French bank Societe Generale (SOGN.PA) is forecasting a "significant" drop in 2012 investment-bank revenue compared with 2011, weighed by higher funding costs and efforts to slash its balance sheet, according to an internal memo obtained by Reuters on Monday.

France's second-biggest listed bank has also decided to exit or strongly reduce property, shipping and aircraft financing activities, as well as physical energy trading in North America, according to the 245-page memo sent to employee representatives.

"(SocGen) CIB expects a significant drop in revenues for 2012 compared with 2011, weighed by higher charges linked to funding and balance-sheet reduction," the memo said.

A spokeswoman for SocGen said the bank had already warned that its moves to cut debt and shrink its balance sheet would see revenues fall by 750 million euros ($955.32 million). "(This) is a significant drop and excludes charges linked to asset sales," she said.

SocGen to replace private bank head, sources say

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(Reuters) - French bank Societe Generale (SOGN.PA) is set to announce an overhaul of its private banking unit that will see Daniel Truchi replaced as head of private banking, according to several sources familiar with the matter.

SocGen, France's second-listed bank, is cutting jobs, selling assets and overhauling management under Chief Executive Frederic Oudea as it seeks to restore investor confidence after a brutal 2011.
"Operationally, (Truchi) is stepping down as head of the private bank," one of the sources told Reuters.

(reporting by Lionel Laurent and Julien Ponthus)

Credit Agricole Slims Down With Private-Equity Sale

(Reuters was alone in getting the price-tag of the deal)

By Lionel Laurent and Simon Meads
PARIS/LONDON, Dec 16 (Reuters) - Credit Agricole , is selling its private equity unit for more than 300 million euros ($390 million), a banking source close to the deal said, as the French bank looks to cut its exposure to risky assets.
In spite of large disposals in 2011, banks still have tens of billions of dollars in private equity assets. That raises the prospect of more sales as they try to shrink balance sheets.
The sale to Coller Capital, a British-based firm which specialises in buying secondary private equity assets, will reduce the risk-weighted assets of Credit Agricole by 900 million euros, the French bank said on Friday.
That is a fraction of the 30 billion euros in risk-weighted assets the bank -- which this week announced its second profit warning of the year -- has said it aims to ditch by January 2013.
"In terms of risk-weighted assets, it is peanuts compared with Credit Agricole's total of 370 billion," said one London-based analyst.
"But it is another sign that banks are unwinding all the kinds of activities that were very sexy during the leverage boom. This kind of thing takes up management time and has an unfavourable impact under Basel III."

(Read on...)

What's In An AAA? Use Your Judgment, Investors Say

By Lionel Laurent and Sinead Cruise
PARIS/LONDON, Dec 15 (Reuters) - In a world where the United States no longer has a AAA and big economies like France and Germany risk losing theirs, investors are increasingly relying as much on their own judgement of top-bracket creditworthiness as on the opinions of ratings agencies.
While two of the largest agencies, Moody's and Standard & Poor's, have been criticised by governments and banks for recent downgrades and threats of ratings cuts, investors say loss of the cherished AAA no longer means an instant "sell".
Critics fear the credit ratings industry is at risk of making rash calls as it fights to restore its credibility after grave mistakes in evaluating billions of dollars of subprime mortgage debt in the run-up to the 2008 financial crisis.
Once the first port of call for funds assembling new portfolios, managers are increasingly sidelining agencies in favour of their own research and are consulting clients to decide if they remain comfortable holding an investment, whether it comes with the top rating or not.
"More and more we are having conversations with clients, as opposed to selling something instantly that falls below that criteria," said Jennifer Gillespie, head of money market funds at Legal & General Investment Management, which runs around 15 around billion pounds ($23.4 billion) of assets in cash and liquidity strategies.
"You cannot be so black and white because the average credit rating of money-market instruments is not AA or AA-plus, it is getting closer to A," she said.

(Read on...)