Societe Generale Sees Equities Rebound as Derivatives Hit Fades

Societe Generale SA’s equities trading rebounded to pre-pandemic levels in the first quarter, easing pressure on CEO Frederic Oudea after 2020 losses at the unit from complex derivatives contributed in to the bank’s worst year in decades.

Revenue from buying and selling equities is expected to surpass the threshold of 600 million euros ($705 million) and may come in close to the 667 million euros seen in the first quarter of 2019, people familiar with the results said. That recovery comes after revenue at the unit was practically wiped out in the first quarter of last year and suffered a slower rebound than at rival BNP Paribas SA.

The normalization has been helped by a recovery in dividend futures products, one of the people said. Amid the unprecedented economic turmoil of the pandemic, those trades in particular blew up when companies canceled shareholder payouts.

The people asked not to be named discussing confidential matters. A spokesperson for SocGen declined to comment.

The up-tick will come as a relief for traders who’ve seen some of the steepest cuts to 2020 bonuses in the industry. The performance in 2020 added to pressure on Oudea, the longest-serving CEO of a major European bank. The trading loss prompted him to review the bank’s structured products, cut 640 jobs at the investment bank and pledge 450 million euros of cost cuts in the markets unit.

Earlier this month, SocGen’s head of finance William Kadouch-Chassaing signaled a strong start to the year in its trading business, a trend echoed by lenders around the region. Up until late in 2020, the unit’s recovery remained subdued despite a broad-based market rally, with a fourth quarter performance down 7%, contrasting with double-digit gains on the biggest Wall Street banks’ equities trading desks.

Europe’s top investment banks are still profiting from a boom in trading and advisory work well into the first quarter, signaling there’s no end in sight yet to the gains that drove profits last year.

Credit Suisse Group AG had signaled its best trading start to a year in a decade, and Deutsche Bank AG has also flagged strong momentum.

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