Market collapse: Société Générale CEO reacts

Sélectionné par la rédaction

Par Le Figaro pour le cercle :

INTERVIEW – Société Générale, France’s second largest bank, saw its stock plummet 14.7 percent on Wednesday. CEO Frédéric Oudéa explains.

LE FIGARO.- How can you explain the collapse of Société Générale’s stock price yesterday?

Frédéric OUDÉA. – We have had to face a series of attacks on the stock markets. First there were rumors – denied by rating agencies – that France would lose its “AAA” rating Wednesday evening or this morning. Speculation then moved to the banking sector, naturally exposed to its country’s economy, and to sovereign debt in the euro zone. Then some completely fanciful rumors, which I deny with the utmost vigor, targeted the Société Générale.

[The Société Générale asked the French stock market authority (AMF) on Tuesday to investigate the “origin of these rumors” which “strike a grave blow to the interest of its share-holders.”]

Have you suffered any important trading loss these last few days?

No, we haven’t suffered any particular losses and our performances to date are satisfactory. During the presentation of this semester’s results, I mentioned fears about the macroeconomic environment, which have unfortunately revealed themselves to be true these last few days. They were not in any way a judgement on Société Générale’s activity. As a precaution, we announced a delay for our 2012 financial goals but we remain confident in our capacity to generate solid results.

Why is the Société Générale so often the target of market rumors?

For two years now, we have been profoundly changing the Société Générale model. This path to change – which I re-explain trimester after trimester – will convince over time. The Société Générale relies on three activities: retail banking in France, retail banking abroad, mostly outside the euro zone in countries that aren’t suffering from public finance problems, and finally in finance and investment banking which has been yielding very positive and constant results for 18 months. We have a high solvency ratio of 9.3 percent and have demonstrated our continued capacity to generate capital.

The Greek Prime Minister mentioned an extension of Greece’s rescue plan to maturities past 2020. What will be the consequences for your bank?

We will be in no case concerned by such an extension: we don’t hold any Greek securities whose maturities are past 2020. We included provisions for our entire exposure to Greece in the second trimester, according to the methodology recommended by the international institute of finance.

Do you understand investors’ fears about the euro zone?

I don’t share at all the markets’ extreme scenarios. I don’t think the euro is in danger: the governments are very attached to the single currency and lucid about the efforts that must be made to honor their commitments to straighten out public finances.

To what extent does the nervousness on the interbank market affect you?

We have absolutely no fears about our financing capacity: we have realised 93 percent of our annual long-term financing program. In the short-term, we dispose of 105 billion euros in assets that can be mobilized at central banks and we retain total access to the interbank market.

--

» Read the original interview in French by Anne de Guigné

» Read more articles in English

» Le Figaro in English on Facebook and Twitter