By Estelle Shirbon
PARIS, Jan 24 (Reuters) - French bank Societe Generale has no immediate liquidity need but a second tranche of government aid will provide extra comfort in an uncertain environment, the bank's CEO was quoted as saying on Saturday.
Last year, the French state agreed to lend the top six banks including Societe Generale (SocGen) a total of 10.5 billion euros ($13.6 billion) to prop up their capital reserves. It is now working on a second operation of roughly the same amount.
'We have no immediate need for capital, but this second tranche should give us extra comfort and flexibility to keep lending in an environment that remains very uncertain,' SocGen Chief Executive Officer Frederic Oudea told newspaper Le Journal du Dimanche in an interview released to media on Saturday.
'We are giving ourselves a few months to decide the modalities,' he said in the interview, which will be published in the newspaper on Sunday.
SocGen issued a surprise statement on Wednesday to dispel fears about its financial position, saying it expected to make a profit of about 2 billion euros in 2008. It also warned of more trading losses.
Oudea was among several senior banking executives who renounced their annual bonuses this week under pressure from President Nicolas Sarkozy, who argued that banks that had received public money should not reward their executives.
French banks have also come under pressure from political circles and public opinion not to hand out dividends to shareholders based on a similar argument that public money should not end up rewarding private interests.
DIVIDENDS 'LEGITIMATE'
In his interview, Oudea rejected that reasoning.
'Our shareholders, be they institutional investors or the 330,000 private French individuals who have invested in Societe Generale shares, have already suffered from the drop of the share price,' Oudea said.
'It seems legitimate to me to preserve their long-term commitment to the company and to avoid a double penalty.'
SocGen shares have fallen about 30 percent since the start of 2009 after a 60 percent drop in 2008.
Asked to react to complaints from companies and households that banks were reluctant to lend despite the government aid, Oudea said the perception was not accurate.
'There is no credit crunch in France,' he said.
'At Societe Generale, if you compare the volume of our loans at the end of November 2008 with the same period in 2007, you can see that they have increased by 11 percent on average.'
SocGen's woes started earlier than those of the rest of the sector last year, when in January it revealed 4.9 billion euros in losses which it said were the result of unauthorised and fraudulent deals by junior trader Jerome Kerviel.
A year later, SocGen continues to be dogged by the scandal, which is being investigated by financial police, and some analysts and fund managers say it remains a possible bid target.
But Oudea said the scandal had perhaps indirectly helped SocGen by forcing it to reinforce controls before the worst of the global financial crisis struck.
'We would have preferred not to have suffered this fraud. But it led us to reduce our risks and reinforce our controls very early on in the crisis with the ambition to be ahead of the rest of the industry,' he said. 'This trial also toughened us up and reinforced solidarity among us.'
(editing by Elizabeth Piper) ($1=.7719 Euro) Keywords: SOCGEN/ (estelle.shirbon@reuters.com, +33 1 4949 5342, Reuters Messaging: estelle.shirbon.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
PARIS, Jan 24 (Reuters) - French bank Societe Generale has no immediate liquidity need but a second tranche of government aid will provide extra comfort in an uncertain environment, the bank's CEO was quoted as saying on Saturday.
Last year, the French state agreed to lend the top six banks including Societe Generale (SocGen) a total of 10.5 billion euros ($13.6 billion) to prop up their capital reserves. It is now working on a second operation of roughly the same amount.
'We have no immediate need for capital, but this second tranche should give us extra comfort and flexibility to keep lending in an environment that remains very uncertain,' SocGen Chief Executive Officer Frederic Oudea told newspaper Le Journal du Dimanche in an interview released to media on Saturday.
'We are giving ourselves a few months to decide the modalities,' he said in the interview, which will be published in the newspaper on Sunday.
SocGen issued a surprise statement on Wednesday to dispel fears about its financial position, saying it expected to make a profit of about 2 billion euros in 2008. It also warned of more trading losses.
Oudea was among several senior banking executives who renounced their annual bonuses this week under pressure from President Nicolas Sarkozy, who argued that banks that had received public money should not reward their executives.
French banks have also come under pressure from political circles and public opinion not to hand out dividends to shareholders based on a similar argument that public money should not end up rewarding private interests.
DIVIDENDS 'LEGITIMATE'
In his interview, Oudea rejected that reasoning.
'Our shareholders, be they institutional investors or the 330,000 private French individuals who have invested in Societe Generale shares, have already suffered from the drop of the share price,' Oudea said.
'It seems legitimate to me to preserve their long-term commitment to the company and to avoid a double penalty.'
SocGen shares have fallen about 30 percent since the start of 2009 after a 60 percent drop in 2008.
Asked to react to complaints from companies and households that banks were reluctant to lend despite the government aid, Oudea said the perception was not accurate.
'There is no credit crunch in France,' he said.
'At Societe Generale, if you compare the volume of our loans at the end of November 2008 with the same period in 2007, you can see that they have increased by 11 percent on average.'
SocGen's woes started earlier than those of the rest of the sector last year, when in January it revealed 4.9 billion euros in losses which it said were the result of unauthorised and fraudulent deals by junior trader Jerome Kerviel.
A year later, SocGen continues to be dogged by the scandal, which is being investigated by financial police, and some analysts and fund managers say it remains a possible bid target.
But Oudea said the scandal had perhaps indirectly helped SocGen by forcing it to reinforce controls before the worst of the global financial crisis struck.
'We would have preferred not to have suffered this fraud. But it led us to reduce our risks and reinforce our controls very early on in the crisis with the ambition to be ahead of the rest of the industry,' he said. 'This trial also toughened us up and reinforced solidarity among us.'
(editing by Elizabeth Piper) ($1=.7719 Euro) Keywords: SOCGEN/ (estelle.shirbon@reuters.com, +33 1 4949 5342, Reuters Messaging: estelle.shirbon.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.