French Bank raises the cash
French bank, Société Générale (SocGen), has today announced a €4.8 billion (£4.4 billion) cash call to its shareholders which would allow it to buy back the stake acquired by the French Government at the height of the credit crunch – The bank states that the deal will also allow it to reinforce the quality of its solvency ratios whilst seizing its potential external growth opportunities.
The banks decision comes a week after BNP Paribas, its larger rival, announced their €4.3 billion share issue that will pay back its government rescue.
€5 billion of SocGen’s losses were racked up by the allegedly unauthorised trading of Jerome Kerviel, whereby preliminary charges have been filed against the French trader, however, the bank will use €3.4 billion of the proceeds to buy back €1.7 billion in preference shares the French state took in May and another €1.7 billion in special securities that it bought in December last year.
The bank has also initiated talks to buy the remaining 20% it does not yet own of Crédit du Nord, the French retail bank, from Dexia, the Franco-Belgian banking group – whereby following this acquisition and following repaying the government, the bank stated that its core tier one ratio – a key measure of its financial solvency – would be around 8% which is comfortably in line with most current regulatory requirements.
Source;
Business.timesonline.co.uk/ Industry Sectors/ Banking & Finance
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6862707.ece