Societe Generale fell the most in three months after plunging demand for the derivatives products the French bank pioneered turned its traditional strength into a weakness.
Bloomberg News reports that the 19% slump in revenue last quarter at the equities division, including prime services, missed the estimate of analysts - who predicted little change - and trailed a gain of about 6% recorded by arch-rival BNP Paribas. Debt-trading income also tumbled.
These trading revenue declines are “near worst in class,” Omar Fall, an analyst at Mediobanca SpA in London, said in a note to investors. “The elements of our negative thesis are all confirmed here: loss of share in Corporate and Investment Banking, litigation risk and under-performance in French retail.”
SocGen was “more impacted on the equities side” than some European rivals because the French bank relies on structured products that are “more sensitive to the very low volatility environment,” Deputy Chief Executive Officer Severin Cabannes said in a Bloomberg Television interview Friday.
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