Societe Generale Chief Executive Frederic Oudea defended his role at an annual shareholder meeting Tuesday evening and promised a rebound in 2010 as concerns persisted over the French bank's prospects.
Societe Generale's shares closed down 6.3 percent in a sector-wide hammering that saw pan-European markets drop to their lowest close since early September 2009.
Investor sentiment in banks is crumbling as nations tussle with their debt load and contemplate tighter regulation of the once-proud banking sector, though Oudea kept a confident tone.
2010 is a real turning point, it will be a rebound year, he told investors. We are in line to meet our previously indicated targets.
Oudea, who took over both chairman and chief executive roles last year, hit back at investors who criticized his combined powers by saying he was reliant on the support of a unified and skilled management team.
Representatives of activist funds PhiTrust and Hermes were among those who called for separate chairman and CEO positions at the shareholder meeting, though French law did not permit them to submit a proposal on the issue for a vote.
Vice-Chairman Anthony Wyand backed Oudea at the meeting, saying: The fragility of Societe Generale faced with change at the top ... convinced us unanimously that separation of powers was not the best solution.
Societe Generale is trying to start afresh after the Jerome Kerviel rogue trader scandal and hefty subprime mortgage losses saw it overhaul top management and hive off its toxic assets.
But the group is under pressure to show how it will compete in an industry beset by sluggish macroeconomic growth, planned fiscal austerity measures and expected tighter regulation.
Oudea also gave the broad outlines of a five-year plan dubbed Ambition 2015 at the meeting but stopped short of any details beyond capturing emerging-market growth and keeping the bank's diversified business model.
This transformation will need time, said Oudea, adding there would be visible results before 2015 in some areas.
Societe Generale is expected to give more details of the plan at an investor day on June 15, which some analysts believe will be central to restoring confidence in the group.
On the international side, on retail banking, on the risk profile, there are a lot of things to do, a French banking analyst said. Investors need to be assured that the new management, at all levels, can do the job.
Societe Generale has been among the banking sector's worst performers so far this year, driven partly by exposure to Greece via local subsidiary Geniki Bank and toxic asset writedowns.
The stock is down 37 percent so far this year, compared with a 17 percent fall for the STOXX Europe 600 bank index
Anticipation of the June investor day had led some analysts to view the stock favorably, particularly after strong first-quarter results, but in the current environment many analysts are favoring more stable rival BNP Paribas .
Societe Generale stock was being held by hedge funds looking to play the investor day rebound, but in these conditions they are suffering enormously, so some are capitulating, said an analyst based in London.
(Editing by David Holmes; Editing by Richard Chang)