Societe Generale reported a 19 percent fall in quarterly net income on Thursday as the French bank earmarked further provisions for potential legal costs and announced it had settled a legal dispute with the Libyan Investment Authority (LIA).
Here are some of the highlights:
- Revenue rose 4.8 percent to 6.47 billion euros versus 6.39 billion euros ($ 6.97 billion) expected by Thomson Reuters analysts’ consensus.
- Net income down 19 percent to 747 million euros from 924 million euros the year previous
- Set aside an extra 350 million euros for potential legal costs in first quarter.
France’s third largest lender by assets said, in conjunction with the LIA, a confidential agreement had been signed to settle a legal dispute after the bank had been accused of paying bribes to secure business from Libya’s sovereign wealth fund.
“Societe Generale and the Libyan Investment Authority (LIA) jointly announce that they have signed a confidential settlement agreement that resolves all matters between both parties concerning five financial transactions entered into between 2007 and 2009 that have been the subject of legal action in the English High Court,” the joint statement said Thursday.
The five trades carried out between 2007 and 2009, before Muammar Gaddafi was ousted as Libyan leader, had totaled more than $ 2.1 billion. A Reuters report, citing a SocGen spokeswoman, suggested the French lender would be set to pay 963 million euros as part of the settlement with the LIA.
“Societe Generale apologies to the LIA and hopes that the challenges faced at this difficult time in Libya’s development are soon overcome,” SocGen added.
The Paris-based bank said Thursday it wished to express its “regret” at the lack of caution given to some of its employees.
SocGen had raised its total provisions for possible litigation costs by 350 million euros ($ 381 million) in the first three months of the year, which amounted to total legal provisions of 2.4 billion euros.
The legal dispute between the LIA and SocGen had been expected to run until July 31 before a joint settlement was signed Thursday. However, the French investment bank is also currently under investigation from U.S. authorities regarding deals involving the same North African country.
The U.S. Department of Justice, as well as the Securities and Exchange Commission, have both served SocGen with subpoenas requesting documents concerning transactions with Libyan entities and officials, including the LIA. The French lender said in its latest annual report it would continue to cooperate with U.S. authorities.
“Given notably the additional provision for disputes booked in (the first quarter of 2017) for 350 million euros, the impact of this settlement in full-year group net income is fully covered as from Q1 2017,” SocGen said in a statement.
Meanwhile, the French lender’s earnings showed revenues had increased by almost 5 percent, bolstered by stronger results from its investment bank and retail activities outside France. Its shares continued under pressure during early afternoon deals on Thursday.
SocGen’s results were posted a day after its rival, and France’s largest bank by assets, BNP Paribas had reported higher profits in the first three months of the year, beating on analyst expectations.