French bank Société Générale has defended its 250 million euro bonus payout. Its net profit for 2009 fell to 678 million euros, just a third of profits the previous year.
AFP - Societe Generale, hit by a major trading fraud scandal two years ago, on Thursday defended the payment of at least 250 million euros (340 million dollars) in bonuses to traders this year as it reported a two thirds cut in profits.
The bank announced 2009 net earnings of 678 million euros (920 million dollars), a third of the previous year, but Societe Generale chairman Frederic Oudea rejected criticism of bonuses.
"Societe Generale has paid for the crisis and its past errors and we have learned our lessons," Oudea said on BFM radio.
Shares in Societe Generale had fallen 4.4 percent to 40.26 euros in early trade on a Paris market that was slightly weaker overall.
Oudea highlighted the role the bank plays in the French economy. Sixty percent of its international finance and investment workforce are in Paris, which he said amounted to 6,000 direct jobs.
"It is a chance for France, it is a chance for Paris and it contributes to the state budget," he insisted.
"When we give one euro to one of our traders in 2010 there will be a parallel payment of about 2.8 that will go to finance our schools, our health systems and our social payments," Oudea said.
The 250 million euros will be the 2009 bonus paid this year, according to the chairman, from which any taxes would be taken. The French government has ordered a 50 percent tax on any bank bonus above 27,500 euros.
Societe Generale also said that about 55 percent of the total bonus payments would in effect be spread out over the three following years and could be cancelled if traders do not meet performance targets. Some will get their bonuses as shares.
Former Societe Generale trader Jerome Kerviel goes on trial in June in connection with losses of about 4.9 billion euros that were uncovered in January 2008. The bank had to unwind more than 50 billion euros of unauthorised deals Kerviel is alleged to have made.
He faces charges of breach of trust, falsifying and using fake documents and tampering with computer information.
Societe Generale's profit results were above market expectations, but it said they were hit by share losses and provisions against losses.
Dow Jones Newswires analysts had predicted a net profit of 605 million euros (821 million dollars).
Troubled shares in the Societe Generale portfolio, with an overall value of 37 billion euros at the end of 2009, made a net loss of 2.8 billion euros over the year, including one billion in the fourth quarter, the bank said in a statement. Most of the troubled shares are in the US commercial and private real estate sector.
Societe Generale warned in January that it expected losses on certain shares to be higher than expected in the fourth quarter.
But revenues from the finance and investment sector more than quadrupled in 2009, making a profit of 623 million euros against a loss of 1.8 billion in 2008 -- when they were hit by the Kerviel scandal.
The retail banking operations reported a profit of 971 million euros, down 22 percent, Societe Generale said.
Oudea said in the bank's statement that after "a year of transition," the banks was "confident in its capacity to bounce back."
Date created : 2010-02-18