A SocGen Trading Desk Was Shut Down After the Team Lost $20 Million in 2018
A SocGen Trading Desk Was Shut Down After the Team Lost $20 Million in 2018
(Bloomberg) -- A team of traders at Societe Generale SA lost about 18 million euros ($20 million) on speculative market bets in 2018, prompting the French lender to begin shuttering the desk a few weeks later, U.K. filings show.
SocGen’s Descartes Trading division, set up to make proprietary trades for the Paris-based bank, swung to the loss from a 17.6 million-euro profit in the prior year, according to a report filed with Companies House in the U.K. The desk was “less performing’’ because of adverse markets and cautious strategies, the filing shows.
The loss compounded a 2018 slump at SocGen’s investment bank that forced Chief Executive Officer Frederic Oudea to pull back from his previous strategy of expansion. The CEO has since laid out plans for a deep reorganization of the division, including the shuttering of Descartes, cost cuts and exits from other trading businesses.
“The disappointing 2018 performance of Descartes Trading in a difficult market environment made Societe Generale Group question the future of the company in early 2019,’’ the filing shows.
Descartes directors met Jan. 25 to discuss the future of the business, the filing shows. Officials at the French bank decided to shut the desk in April as part of Oudea’s wider overhaul.
Fanny Rouby, a spokeswoman for SocGen, declined to comment.
Total assets at Descartes shrank 29% during the year to 2.9 billion euros, the filing shows.
Descartes’ closure came soon after crosstown rival BNP Paribas SA moved to shutter its own proprietary-trading division, Opera Trading Capital. That business had also struggled to make money in 2018.
Both French banks had pursued proprietary trading, or prop for short, long after others had pulled back from the activity. Prop traders make market bets for their own account rather than seeking to match buyers and sellers. Bank regulators around the world clamped down on the practice in the aftermath of the financial crisis because of the risks it can pose.
To contact the reporter on this story: Donal Griffin in London at dgriffin10@bloomberg.net
To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, Ross Larsen
©2019 Bloomberg L.P.