UPDATE 1-SocGen shares fall after deputy CEO unexpectedly leaves


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PARIS (Reuters) – Societe Generale (SOGN.PA) shares fell on Thursday after the French bank announced the unexpected departure of deputy chief executive Didier Valet.

A logo of French bank Societe Generale is pictured on a building in Geneva, Switzerland, November 8, 2017. REUTERS/Denis Balibouse

SocGen shares were down 2.4 percent in early session trading, making them the worst performer on Paris’ benchmark CAC-40 index .FCHI and one of the worst on the pan-European STOXX 600 index .

The STOXX Europe 600 banks index .SX7P was up 0.4 percent.

Late on Wednesday, SocGen said Valet – its deputy CEO who was also in charge of its investment banking activities – was leaving “‍following a divergence of approaches regarding management of a specific legal matter”.

SocGen did not give any more details in its statement about the legal matter and said Valet resigned in order to preserve the bank’s “general interests”.

The “divergence of approaches” related to investigations over the suspected rigging of the London interbank offered rate (Libor), an interest rate used in contracts worth trillions of dollars globally, a source familiar with the matter said.

“This announcement comes as a negative surprise as Didier Valet was well regarded and the market did not expect top management changes on litigation cases that should be adequately provisioned,” wrote JP Morgan analysts, who kept a “neutral” rating on SocGen shares.

That view was echoed by analysts at investment banks Jefferies and Kepler Cheuvreux. Jefferies kept a “buy” rating on SocGen shares but Kepler took a slightly more negative view, with a “hold” rating.

“Following the totally unexpected departure of deputy CEO Didier Valet due to a ‘divergence of approach regarding the management of a specific legal matter’, Societe Generale is left once again in the throes of another crisis,” Kepler analysts wrote.

“We maintain our ‘Hold’ rating, but we believe this departure could be the one problem too many for SocGen, which we believe is now at play.”

SocGen is one of several banks to be caught up in investigations into the rigging of Libor around the time of the global financial crisis. U.S. authorities charged two former SocGen managers last August with taking part in a scheme to manipulate the global U.S. dollar Libor benchmark.

“It’s the biggest thing to happen in the group since the departure of Jean-Pierre Mustier,” an insider said of Valet’s departure.

Mustier, head of the investment bank at the time of the Jerome Kerviel trading scandal, quit in 2008. He is currently CEO of Italy’s UniCredit (CRDI.MI).

Valet, a close and long-time ally of chief executive Frederic Oudea, started his career at SocGen in 2000. He was chief financial officer from 2008 to 2012 and had been head of investment banking activities since 2012.

Under Valet, the bank has worked on making investment bank revenue less volatile by increasing the share of fixed income activities versus equities.

The bank said his replacement would be announced shortly.

Reporting by Sudip Kar-Gupta; additional reporting by Blandine Henault; editing by Maya Nikolaeva and Jason Neely


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