The chief executive of French bank Societe Generale is not ruling out a recession in France in 2012 and says the bank will have to cut hundreds of jobs to beef up its balance sheet and restore investor confidence, according to a trade union memo obtained by Reuters.
Frederic Oudea, who met with trade unions on Tuesday to discuss planned job cuts, also said there would be asset sales at the bank's GIMS asset-gathering arm and its Specialised Financial Services (SFS) arm by mid-2012, according to the memo.
Oudea does not rule out a recession in France in 2012, the memo sent to union members said. He does not believe he can avoid - as at other banks - layoffs (several hundred in France and internationally).
A spokeswoman for SocGen did not offer immediate comment.
French banks like SocGen and BNP Paribas are fighting to restore confidence after a dramatic flare-up of the euro zone debt crisis this summer pummelled the sector. They are selling assets and cutting jobs to help plug an estimated capital shortfall of 8.8 billion euros (7.5 billion pounds) by 2012.
At least 500 jobs could go at SocGen, France's second-biggest listed bank, one union source earlier told Reuters, a number which SocGen refused to confirm. Rival BNP is to hold talks with its unions on Wednesday and has already said job cuts will be in the hundreds rather than thousands.
Such numbers would be at the low end of the European bank layoffs scale, especially compared with Unicredit's announcement on Tuesday of 6,150 cuts. [
SocGen has also said it will scrap its dividend and slash bonuses this year. According to the trade union memo, CEO Oudea said the top salaries at the bank would be frozen, while broad salary policy was for an increase of less than 1 percent and less than 2.5 percent for the bottom earners.
Oudea said he did not have a choice, adding that what was happening today was worrying in terms of competitiveness, the memo said. (U.S.) Dollar activities will be cut by at least one-third and Oudea does not think it will ever go back to prior levels, the memo said.
A spokeswoman for SocGen said the bank's management had met with trade unions on Tuesday morning and talks would continue in the afternoon, confirming information from union sources.
But she would not confirm a number of job cuts of between 500 to 600 given by one union representative.
It is premature to give more details on the staff adjustments that will be necessary at the corporate and investment bank, in France and abroad, she said.
A union source told Reuters: We are negotiating the layoff plan ... staff are very worried. (The number of cuts is) between 500 and 650.
Another union representative said SocGen CEO Oudea, who rose to the top spot after the Jerome Kerviel rogue trading scandal almost brought the bank to its knees in 2008, had met with unions earlier on Tuesday.
SocGen's investment bank, which employs some 12,000, has already been cutting staff at the margins since the summer, according to employee sources, following a drastic loss of confidence from U.S. money markets in European banks.
BNP Paribas Chief Executive Baudouin Prot has already said his bank's job cuts will be in the hundreds of people rather than thousands, but it is still not clear how many people could go.
A report on Israeli business website Globes said that BNP was closing its branch in Israel and downgrading its operations to a representative office, resulting in 50 layoffs. A spokeswoman for BNP Israel was unavailable for comment.
French labour laws strictly regulate how layoffs can proceed and French banks are seen leaning towards voluntary departure schemes, less costly than straightforward firings.
SocGen's union memo said that priority would be given to voluntary departures and that the final details would be hammered out as soon as possible.
(Reporting by Lionel Laurent and Matthieu Protard; Editing by Hans-Juergen Peters)