SocGen to announce new CFO, top exec Ripoll to quit -sources

(Full story)

By Lionel Laurent and Matthias Blamont

PARIS, Feb 12 (Reuters) - Societe Generale will name a new chief financial officer on Wednesday, seeking stability in the role after Bertrand Badre quit a year into the job, sources close to the matter told Reuters.

Internal candidates at France's No.2 listed bank are the frontrunners to replace Badre, who is leaving in March to join the World Bank, the sources said. Among those in the frame are Deputy CFO Philippe Heim and the head of specialist financial services Didier Hauguel.

Though analysts say the final choice is unlikely to have a major impact on market perceptions of the bank, which also reports fourth-quarter results on Wednesday, Chief Executive Frederic Oudea is under pressure to give clues on its long-term strategy.

The bank is at the end a year-long drive to reduce debt and beef up its balance sheet, while rivals such as UBS and Barclays are launching major overhauls.

Two people close to the bank also said that Jacques Ripoll, head of its asset-gathering division GIMS, would step down. Ripoll was offered the CFO job early in the process but turned it down, they said.

A SocGen spokeswoman declined to comment.

The average forecast in a Reuters poll of eight analysts is for the bank to swing to a fourth-quarter net loss of 237 million euros ($317 million), compared with a quarterly profit of 100 million euros in 2011.

This would put SocGen's total annual profit at 1 billion euros - a far cry from the 6 billion euro target set by CEO Oudea in 2010. Though the bank shelved this target in 2011, it has yet to say how it will fight the euro zone's sluggish economic recovery and tougher regulation.

SocGen shares are up 13 percent so far this year, against an 8 percent gain for the STOXX Europe 600 bank index. ($1 = 0.7474 euros)

A very un-French love letter to hedge funds, courtesy of France's finance minister

(Full story)

By Lionel Laurent

PARIS, Feb 5 (Reuters) - Hedge funds play a vital role in the French economy, finance minister Pierre Moscovici said, in comments aimed at defending a government plan to ringfence banks' proprietary trading and leave hedge-fund financing intact.

The proposed reforms, set to be debated in parliament this month, would force banks to make proprietary trading a separate self-funded entity and ban them from owning or operating hedge funds. Secured hedge-fund financing would be left intact.

"While some of these funds have strategies that should be criticised, today the vast majority are necessary and essential players when it comes to financing the economy, whether we like it or not," Moscovici wrote on his official website on Tuesday.

He cited small to medium-sized companies raising funds on the convertible bond market as an example of hedge funds' usefulness. "Hedge funds can represent 60 to 80 percent of demand on this market and so are essential for placing the securities in the best possible conditions for the companies."

Moscovici's stance was at odds with traditional anti-finance rhetoric from politicians on all sides. 

President Francois Hollande said during his 2012 campaign that "speculative funds ... (were) vectors of instability", while his predecessor Nicolas Sarkozy called them "predators" in 2007.

A Paris-based hedge fund manager said the government was changing its rhetoric to drum up support for the reforms and also to build confidence at a time of economic stagnation and bad blood among voters over stubbornly high unemployment.

"For 10 months the government has spent so much time bashing entrepreneurs and the businessworld that it must be thinking it is time to mend relations," he said. "It is tactical."

Belgium seen reversing out of BNP Paribas this year

(Full story)

By Lionel Laurent

PARIS, Feb 4 (Reuters) - A market rally has raised expectations that Belgium will sell its six billion-euro ($8.2 billion) stake in French bank BNP Paribas, leading the way for other indebted governments to recoup bank bailout funds from the 2008 financial crisis.

Banking sources say no official talks have begun but some see a deal happening within the year. A successful sale could encourage other countries with significant bank stakes such as Britain and the Netherlands to follow suit.

"It's possible that a deal will happen this year," an advisory banker familiar with the matter said. "Belgium needs the funds and there is still a bit of upside left in BNP's shares."

Belgium's economy has only seen one quarter of growth in the last six, pressuring the government to find new ways to cut the public deficit, while BNP's share price has soared more than 30 percent over the past 12 months. The STOXX Europe 600 banks index is up 12 percent over the same period.

"Talks have not yet officially begun on this," another banker said, but added that further share gains would bring the process closer.

Politician Wouter Beke flagged a potential sale in December, telling Tijd newspaper that Belgium's aim was not to remain a shareholder of BNP and that the timing of the sale would depend on the stock market.

"It would make sense for Belgium, even if the timing is not clear," said Yohan Salleron, fund manager at Mandarine Gestion in Paris.

Belgium took its 10 percent stake at 68 euros per share in 2008 as part of BNP's rescue of collapsed Benelux bank Fortis, seen today as one of the French bank's canniest acquisitions.

BNP shares today trade almost one third below that level, meaning Belgium would actually lose money at market prices, but investors and analysts say that interest from foreign bidders willing to pay a premium or the use of a convertible bond could offset this. An extended rally could also bump up the price.

French politicians face down united bankers' front

(Full story)

(Reuters) - The heads of France's top three banks said tougher laws to curb risky trading would put the country at a competitive disadvantage as it struggles with record unemployment and a grim economic outlook.

The CEOs of BNP Paribas SA (BNPP.PA), Societe Generale (SOGN.PA) and Credit Agricole SA (CAGR.PA), who were appearing before a parliamentary committee on Wednesday looking into curbing proprietary trading, defended their trading businesses as low risk and vital to the economy.

Proprietary trading is when a bank uses its own capital and balance sheet to carry out trades rather than on behalf of a customer.

The draft law will demand banks separate such activities from client-linked business and has been hailed by France as a model for the rest of Europe.

But critics say the law, which falls short of the suggested ring-fencing of investment banking in Britain's Vickers' reform, for example, breaks President Francois Hollande's campaign pledge to get tough on finance.

France's unemployment rate is at its highest in 13 years as the country struggles with stagnant growth and a pullback in bank credit as lenders across Europe slim down to meet incoming post-crisis Basel III capital requirements.

"Given the significant number of reforms that have come out... This (French) law is neither pressing nor a priority," Jean-Paul Chifflet, Credit Agricole's chief executive, told the panel.

The three heads addressed each other by name and echoed each other's arguments that the proposed law would put them at a disadvantage against their international rivals.

When asked how much of their revenue came from prop trading, SocGen CEO Frederic Oudea admitted the figure was small, at around 1 percent of French banks' total group revenues.

"Within the 15 percent of revenue that comes from capital markets... (prop trading) is less than 10 percent, though it varies depending on the bank," Oudea said.

Citing plans for a banking union in Europe with the European Central Bank as its supervisor - as well as the Basel III global rulebook designed to crack down on risk after the 2008 financial crisis - the bankers said France was in danger of going it alone by forcing lenders to carve out "speculative" activities.

"It would be shocking to have a French law that is not compatible with Europe," BNP head Jean-Laurent Bonnafe said.

Several lawmakers mocked the CEOs for criticizing a law that would only impact a tiny slice of business. "If I understand correctly, this law doesn't bother you that much," said Socialist deputy Karine Berger.

Speaking to the same committee, French Finance Minister Pierre Moscovici said he was open to the possibility of amending the bill in parliament so that some market-making activities might be put into the prop basket as well - but urged caution.

"Yes, let's be reformers, but let's not be total masochists when it comes to our economy," Moscovici said.

Another French bank decides cuts are the only way

(Full story)

Jan 21 (Reuters) - Credit Agricole is working on a cost-cutting plan of 150 million to 200 million euros ($199 million to $266 million) through 2015 at its corporate and investment banking unit, a union source said.

The bank's management recently briefed unions on the planned expense reductions, reassuring them that there wouldn't be any new job cuts after the bank laid off 1,750 staffers last year, the source said.

"The management told us there wouldn't be any layoff plan," the source said, "but that there were expenses to be cut between 150 and 200 million euros, by 2015."

The plan is the latest sign that big European banks are having to resort to further cost cuts to try to boost profits as investment banking revenues remain erratic and retail and consumer lending are depressed by weak economic growth.

Bank lobby preached to the converted in liquidity talks

(Full story)

By Huw Jones and Lionel Laurent

LONDON/PARIS, Jan 21 (Reuters) - Lobbyists found themselves preaching to the converted: the European Central Bank and Bank of England needed little persuading in the end that new global liquidity rules for commercial banks needed loosening.

Central bankers realised they had to relent unless they wanted to remain cash machines for squeezed European lenders indefinitely, said sources close to negotiations on the rules.

Earlier this month, commercial banks got their way after a campaign whose subtlety contrasted to past aggressive and unsuccessful lobbying efforts.

Global regulators gave them four more years and greater flexibility to build up sufficient liquid reserves - those that can be sold quickly for cash even during crises - so that taxpayers would no longer have to fund rescues like in 2007-09.

"What helped the ECB and Bank of England rally to European banks' cause was the realisation that liquidity deficits were a central bank issue," said a banking source close to the talks.

"The change in their minds happened around the middle of last year," said the source, who declined to be named because he was not authorised to speak publicly about the talks.

BNP Paribas briefs staff on plan to cut costs

(Full story)

By Lionel Laurent

PARIS, Jan 18 (Reuters) - French bank BNP Paribas plans to spend 1 billion euros ($1.3 billion) over three years to pare down its businesses in response to lackluster growth in Europe, according to a union source.

Analysts and investors expect France's largest bank to lay out its new strategy in the coming months after a rocky year spent selling assets and cutting jobs.

Banks across Europe are shrinking to boost defences against a weakening economy and comply with tougher global regulations.

Germany's Deutsche Bank and Switzerland's UBS have recently announced job cuts while Britain's Barclays is preparing a new strategic plan.

BNP and domestic rivals Societe Generale and Credit Agricole have so far focused their restructuring efforts on investment-bank activities hardest hit by the financial crisis, but are now expected to turn to activities like retail banking exposed to weak European growth.

BNP's management outlined the overhaul to staff representatives on Jan. 16 - promising to cut layers of management and simplify decision-making - but stopped short of any details on jobs or how much money would be saved, a source from the SNB union told Reuters.