SocGen to Cut Investment Bank Bonuses 20% After Trading Hit

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Mar 03 2021, 10:26 PMMar 04 2021, 2:18 PMMarch 03 2021, 10:26 PMMarch 04 2021, 2:18 PM

(Bloomberg) -- Societe Generale SA will cut the bonus pool at its investment bank by about 20%, after trading hits in 2020 handed the group its first losing year in more than three decades.

Across the company, payouts are being reduced by an average of 15%, according to a person familiar with the matter, who asked not to be named discussing confidential matters.

SocGen’s markets unit, which posted a net loss last year, saw even bigger pay reductions, with some equity derivatives traders facing a bonus cut of more than 80%, another person said.

The sweeping cuts cap a damaging year for Chief Executive Officer Frederic Oudea, who has seen shares of the French lender slump by more than two thirds since he took over in 2008. SocGen’s payout reductions are likely to be among the deepest at global investment banks after many peers seized on the pandemic market swings to deliver trading and deal-making gains.

The bank’s traditionally-robust equity trading unit delivered a 49% revenue drop in 2020. The reduced variable compensation highlights the mixed performance around the region. UBS AG increased the bonus pool of its investment banking staff by 20% after a surge in trading revenue, while Credit Suisse AG grappled with legal hits and shrank its overall bonus pool by 7%.

A spokesman for SocGen declined to comment on the bonuses.

European banks have been urged by regulators to show constraint in their bonus policy after receiving unprecedented support to weather the crisis. Last month, Deutsche Bank AG had to scale back on its payout plan after the European Central Bank objected to the proposed levels.

Overall, bankers on both sides of the Atlantic are being handed bonus checks that aren’t quite in line with the trading windfalls that many have reaped amid the pandemic. That’s partly because while market gains may have rolled in, other businesses suffered due to the unprecedented economic contractions.

At Bank of America Corp., a flat bonus pool and policy changes on stock awards sparked anger among high earners. Citigroup Inc. left its overall pot unchanged for equities, while boosting it for bond traders by at least 10%. While bigger increases, with growth approaching 20%, have been discussed at JPMorgan Chase & Co. and Goldman Sachs Group Inc., payouts vary widely.