French lender returns to a loss

By Greg Keller | May 8, 2009, Friday |

Print Edition

FRENCH bank Societe Generale said yesterday that it returned to a loss in the first quarter after the further fall of its United States real estate-linked assets caused it to take 2 billion euros (US$2.7 billion) in new writedowns and provisions.

Paris-based Societe Generale, which had struggled to return to profitability last year after losing billions of euros in a massive trading scandal, reported a net loss of 278 million euros in the first quarter, down from a 1.1-billion-euro profit a year earlier.

The bank, whose chairman announced his resignation last week, blamed the downturn in the US real estate market, ratings downgrades of bond insurers, and what it called its own "tighter valuation assumptions" for 1.5 billion euros in new losses and writedowns in its investment banking division.

Societe Generale's loss comes in stark contrast to larger French rival BNP Paribas, which on Wednesday reported a quarterly profit of 1.56 billion euros.

In a statement, it forecast the global economic recession would continue to weigh on banks' performance this year and said "Societe Generale will not be immune from this trend."

The loss is also contrasted with reassuring comments from Societe Generale's chief executive during the quarter.

Finance

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French lender returns to a loss

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