Sat, Jan 19, 2019 - Page 10 News List

French bank gloom hits traders as bonus cuts mulled

‘CHALLENGING’ YEAR:A majority of staff in BNP credit and rates trading could receive no bonuses, while Societe Generale is also mulling steep cuts

Bloomberg

The troubles of French banks swept up their traders on Thursday, with both BNP Paribas SA and Societe Generale SA weighing bonus cuts after a downturn that has hit some of the world’s biggest financial firms.

BNP could pay lower or zero balances to many traders in its global markets unit after posting trading losses and shuttering some businesses, people with knowledge of the matter said.

A majority of staff in credit and rates trading could receive no discretionary awards, the people said, asking not to be identified as the discussions are private.

At Societe Generale, steep cuts in the traders’ bonus pool could be implemented for the second straight year, according to people with knowledge of the matter.

Bonus levels are likely to fall as much as a quarter, mirroring the levels of cuts a year ago, the people said, asking not to be identified because the deliberations are private.

Both banks typically announce bonuses a few weeks after annual results.

BNP Paribas and Societe Generale spokespeople declined to comment.

The likely bonus reductions are the latest bad news from French banks, once renowned for their prowess in complex derivatives and now struggling to navigate increasing risk.

Societe Generale is mulling shuttering its US$4.7 billion proprietary-trading unit, a week after news of BNP plans to shutter that business, people familiar with the matter said.

Natixis SA last month said that it took a hit from hedging Asian equity derivatives.

Societe Generale on Thursday warned that the group’s fourth-quarter trading revenue probably fell 20 percent.

France’s third-largest bank said “challenging” conditions also led to a decline of about 10 percent in annual revenue from its markets units.

Shares of the bank, which is to report earnings next month, plunged 5.7 percent.

On Tuesday, Bloomberg reported that BNP, the biggest of the French banks, lost US$80 million in derivative trades linked to the US stock benchmark index late last year as turmoil gripped global markets, people familiar with the matter said.

The French banks are not alone in suffering from wild markets that have stung traders worldwide.

Morgan Stanley’s fixed-income traders posted their worst results in three years in the fourth quarter.

JPMorgan Chase & Co and Goldman Sachs Group Inc both missed analyst estimates for trading revenue, while Citigroup Inc reported a 21 percent slide in fixed-income trading.

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