Société Générale SA, France's second-largest bank by market value, plans to cut "several hundred" jobs in its French corporate and investment bank in 2012 as part of its push to conform with new capital rules, the company's trade union representatives said Tuesday.
Chief Executive Frederic Oudea told union representatives Tuesday morning at a meeting to discuss third-quarter results that to meet the European Union's new capital rules the bank will need to cut several hundred jobs in France, freeze salaries and reduce bonuses, said trade union La Confédération Générale du Travail in an emailed statement.
Société Générale has been under pressure from the sovereign-debt crisis that has been battering Europe since the summer. It joins a growing list of banks that are laying off staff and reducing investment-banking activities in reaction to persistently volatile financial markets.
The bank also "hopes" to sell one or two activities from its Global Investment Management and Services and Specialized Financial Services and Insurance businesses, said CGT. Oudea also told trade union representatives that the bank would reduce its dollar activities by a third.
Another meeting is scheduled for later this week, when the bank is expected to disclose further details on its plans, said Alain Treviglio, who heads CFDT, another of the bank's major trade unions.
"It was expected," said Pierre Flabbee, an analyst with Kepler Capital Markets. "The move could help the bank meet its new targets in terms of financial and capital ratios," he added. "But to assess the real impact of this plan, we would need to know how many jobs the bank plans to cut globally."
In September, Société Générale disclosed plans to accelerate asset disposals and implement new cost-cutting measures to free €4 billion ($5.45 billion) worth of capital by 2013. Société Générale's shares have lost more than half of their value over the past four months and the bank has been pressed to show jittery investors that it can increase its capital buffers and reduce its sovereign debt exposure to Europe's troubled economies.
As part of the EU's new plan to stem the region's deepening sovereign-debt crisis, the bank also needs now to raise an extra €2.1 billion to meet new capital rules.
Oudea said last week that the bank would meet the European Banking Authority's prudential requirements by mid-2012, and that he was confident it will have a Basel III core Tier 1 ratio well above 9% by the end of 2013. The bank's core Basel II Tier 1 ratio stood at 9.5% at the end of September.
Société Générale said Tuesday it was too early to disclose details of the bank's plans and wouldn't confirm the numbers given by the unions.
Earlier this month, Société Générale said third-quarter net profit fell 31% to €622 million from the year before, undershooting analyst forecasts of €732 million. It was hit by higher provisions against Greek sovereign bonds, and as volatile financial markets pressured its corporate and investment bank.
The suggested job cuts, which should be effective by the end of the first quarter of 2012, would be relatively mild compared with some other European banks.
Italian bank UniCredit SpA said Monday that it plans to cut 6,150 jobs by 2015, or around 4% of its workers. Around 8% of the approximately 9,000 jobs in its corporate markets and investment bank will go. The news came alongside a surprise €10.64 billion third-quarter net loss caused largely by an €8.67 billion goodwill write-down intended to clean up its balance sheet following an earlier acquisition spree. Swiss bank UBS AG has announced plans to cut 3,500 jobs and is expected to increase that figure.
Oudea told unions no jobs would be outsourced. However, a company executive said Tuesday that the bank planned to increase its headcount at a number of key Asia-Pacific offices. The bank will make further announcements on planned hires at its Tokyo and Seoul offices next month, he added.
This story originally appeared on WSJ.com.