Profit Soars to $722 Million at Societe Generale but Misses Expectations

PARIS â€" Société Générale, the big French bank, said Thursday that its third-quarter profit soared from a year earlier, and that it was in talks with Crédit Agricole to take full control of the two companies’ Newedge Group derivatives venture.

Société Générale, based in Paris, said its net income for the July-September period came in at 534 million euros, or $722 million. That represented a roughly sixfold increase from the 90 million euros it posted for the same three months a year earlier, when results were artificially depressed by an accounting charge the bank took against the value of its own debt.

The results fell short of the consensus forecast of a €675 million profit among analysts surveyed by Reuters.

Frédéric Oudéa, Société Générale’s chairman and chief executive, said in a statement that the results demonstrated the bank’s “ability to adapt to a rapidly changing environment.”

On Thursday, the bank said it had begun exclusive negotiations to buy Credit Agricole’s half of their 50-50 Newedge venture, to give it full control of the business. Mr. Oudéa had previously sought to sell Newedge, which is also based in Paris, and Societe Generale booked a nearly €380 million goodwill write-down on its share of the derivatives business in the fourth quarter of 2012.

Mr. Oudéa has been restructuring the bank along three main lines to simplify its organization: French networks; international banking and financial services; and a global unit that incorporates investment banking and private banking, among others.

To that end, he is working to raise the bank’s standing in Russia, agreeing to acquire VTB Group’s 10 percent share in Rosbank, taking Société Générale’s stake to 92.4 percent. He has also sold Société Générale’s Japanese private banking business.

Taking full control of Newedge, “would enable us to give our clients access to an integrated offer across global markets, from execution to prime and clearing services on both listed and over-the-counter products”, said Didier
Valet, Société Générale’s head of corporate and investment banking, in a statement.

Under the terms being discussed, Société Générale would pay Credit Agricole €275 million for its 50 percent Newedge stake; Credit Agricole would buy 5 percent of their jointly owned asset management company, Amundi, for €337.5 million, reducing Societe Generale’s Amundi stake to 20 percent from 25 percent.

Mr. Oudéa said the bank’s restructuring would continue, that “the implementation of a new, refocused and simplified, organizational set-up will help improve the group’s efficiency.”