Soc Gen needs to save money
It announced economies due to falling stock value; as Moody’s threatens to drop its rating and that of two other banks
THE Société Générale bank has announced an economy drive to shore itself up after the value of its stock plunged.
The banks says it will have to take measures including staff lay-offs and selling off its least profitable share holdings, notably American ones which have become unprofitable since the “sub-prime” mortgage crisis.
Its shares have lost 58% on the stock market since July.
The news comes as the bank and two other major French banks – Crédit Agricole and BNP Paribas – face having their rating downgraded by one of the most influential credit rating agencies, Moody’s, which considers they are too vulnerable to the effects of the financial crisis in Greece.
The banks are expected to find out on Thursday if Moody’s will rate them down.
An economist from Nanterre University, Philippe Dessertine, has described the situation as “catastrophic” and said Greece may even have to declare bankruptcy, which would have immediate after-shock on the banks.
The state may have to intervene to bail them out to the tune of tens of billions of euros, he said.
Savings of individuals who use the banks are not expected to be affected, however, because the French government cannot afford to allow the banks to go bankrupt as they are essential to the economy.
