PARIS (Reuters) - Societe Generale plans to cut 1,600 jobs, mainly at its corporate and investment banking arm, in an attempt to boost profits after a poor performance last year, France’s third-largest bank said on Tuesday.

FILE PHOTO: The logo of Societe Generale is pictured outside the headquarters of the French bank at the financial and business district of La Defense at Puteaux near Paris, outside Paris, France, May 16, 2018. REUTERS/Charles Platiau/File Photo

The move is part of a plan announced in February to cut 500 million euros ($563 million) in costs in corporate and investment banking after a steep market downturn forced it to lower revenue and profitability targets.

“Since early February, we have carried out a review of all the activities of corporate and investment banking. Our goal is to restore the business’ profitability above the cost of capital,” said Severin Cabannes, SocGen’s deputy CEO and the head of its corporate and investment banking arm.

The bank, which employs 18,000 people in 30 countries in corporate and investment banking, said it would cut 750 jobs in France, where all redundancies will be voluntary. People will be offered a financial incentive or another job within the bank.

Other cuts, mainly in New York and London, may see the bank fire people.

About 50 jobs of traders are likely to be cut in France, a union representative said. “These people are difficult to move within the bank because in any other job they would lose bonuses that represent a significant part of their income,” the union representative said.

Profits at SocGen’s corporate and investment banking arm fell by more than half in the fourth quarter of last year.

Bruno Benoit, the head of Fixed Income & Currencies at SocGen’s markets unit, is leaving the bank, it said.

SocGen’s shares were up 0.3 percent at 1015 GMT.

“SocGen does not have a choice: increased regulation, high capital requirements and very intensive capital demand to run trading businesses make it a business not profitable,” said Clairinvest fund manager Ion-Marc Valahu.

DESCARTES DUMPED

SocGen will also close some businesses, such as Descartes proprietary trading, and downsize others.

For example, it plans to end over-the-counter commodity trading and reduce the size of its fixed-income arm. Associated jobs from support functions will also go, Cabannes said.

The bank will focus on businesses where it competes successfully on the world stage such as equity derivatives and private banking, and will try to improve the performance of asset management unit Lyxor, he added.

SocGen will also stop serving some clients who are insufficiently profitable.

After years of low interest rates curtailed returns for retail banking, SocGen, BNP Paribas, Deutsche Bank and other big European banks have relied on the more volatile earnings from corporate and investment banking, with mixed results.

Although shares of other major European banks have bounced back this year, SocGen’s are down by more than three percent so far in 2019 amid concerns over solvency and profitability. The stock has lost more than 39 percent over the past 12 months.

Under pressure from investors, CEO Frederic Oudea has said SocGen will sell more assets than originally planned to boost its solvency ratios.

The bank expects to free up to 10 billion euros in capital as part of Tuesday’s reorganization. In recent European Central Bank ‘stress tests’, SocGen was the weakest big French bank.

The redundancies will also affect the headquarters of its international retail banking unit in Paris. As the French bank has withdrawn from Eastern Europe, it requires fewer people to oversee retail banks abroad, Cabannes said.