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Bloomberg
Societe Generale SA agreed with US authorities to settle probes into interest-rate manipulation and the bribery of Libyan officials, drawing a line under two of the French bank’s biggest legal headaches.
SocGen agreed to pay undisclosed penalties to resolve US investigations that it submitted misleading numbers for the London interbank offered rate and, in a separate case, bribed Libyans to win investment deals. The penalties are fully covered by existing provisions, the lender said, without giving further details. The bank was nearing an agreement to pay as much as $1 billion to end the probes, people familiar with the matter said last month.
SocGen joins lenders including Deutsche Bank AG and Royal Bank of Scotland Group Plc that paid billions of dollars in fines to settle such charges. For Chief Executive Officer Frederic Oudea, at SocGen’s helm since 2008, resolving the issues removes an important area of uncertainty for the bank as he works to meet ambitious 2020 targets for profitability and revenue growth.
SocGen rose 2.5 percent to 38.47 euros in Paris trading as of 9:23 a.m, among the biggest gains in the Euro Stoxx Banks Index. That came after news of the settlement and a report in the Financial Times that the bank is considering a merger with Italian rival UniCredit SpA. SocGen denied there are any discussions on a tie up. Talks to end the Libor and Libyan probes, started under President Barack Obama, intensified over recent months, and Didier Valet, appointed deputy chief executive officer at the start of 2017, stepped down on March 14 as the bank worked to resolve the matter. His departure was to help avert restrictions that could be placed on SocGen’s US businesses, a person familiar with the matter said in March.
MANAGEMENT SHAKEUP
Rather than just replacing Valet, SocGen went for a broader management shakeup. Deputy CEO Severin Cabannes is taking over Valet’s investment-banking responsibilities, while SocGen also appointed three new deputy CEOs. That followed a disappointing first quarter for the bank in its key equity trading division.
US prosecutors had collected documents suggesting that SocGen executives were aware that its bankers were submitting fake US dollar Libor rates, Bloomberg News reported in November. The misleading numbers made bank borrowing costs look lower than they actually were.
SocGen’s common equity Tier 1 ratio fell to 11.2 percent at the end of March from 11.4 percent three months earlier, partly because the bank booked regulatory costs.
The Libya probe was the first time that the French authorities have partnered with the Justice Department in a case of such magnitude and complexity. Under a 2016 French law, the country’s prosecuting authorities received expanded powers to fight financial misbehavior, including a new settlement procedure.
The agreement announced also covers the French Parquet National Financier.