By Noemie Bisserbe and Ben Dummett 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 10, 2019).

PARIS -- French bank Société Générale SA said Tuesday it plans to cut nearly 1,600 jobs globally after a slump in investment banking revenue in the fourth quarter, retrenching to its core businesses as choppy markets hobble Europe's banks.

The job cuts at Société Générale come as investment banks in Europe endured a particularly tough first quarter with a slew of economic and political challenges leaving companies reluctant to pursue deals or raise money. Among factors hurting sentiment are the European Commission's recent move to cut its economic growth outlook, the prospect of slumping profits at big German car makers, a recession in Italy, Britain's messy divorce talks with the EU and the yellow-vest protest movement in France.

Shares in the French bank were down 0.11% in late trading in Europe.

Overall investment banking revenue across the region generated from deal making, lending, and equity and debt underwriting fell 33% to $3.5 billion from the year-ago period, according to data provider Dealogic. That was the third-largest decline of any region globally after the much smaller regions of Latin America and the Middle East and Africa. It also stood in contrast to the 3% year-over-year quarterly drop to $10.2 billion in North America.

Last month, UBS Group AG Chief Executive Sergio Ermotti described the first three months of 2019 as "one of the worst first-quarter environments in recent history," prompting the big Switzerland-based bank to target $300 million in extra cost savings. Earlier this month, Japan's Nomura Holdings Inc. announced plans to shrink its operations in Europe because of the "unstable market environment" it faces, Kentaro Okuda, Nomura's co-chief operating officer told investors.

Société Générale said it plans to refocus on its equity derivatives and structured products units, close its over-the-counter commodities business and stop proprietary trading. The bank said it would also restructure its rates, credit, currencies and prime services businesses, along with its asset and wealth management unit, to make them more profitable.

The job cuts at Société Générale will mainly affect the bank's global markets and investor services -- which includes fixed income and equity trading and securities services -- and employs about 22,000 people world-wide, according to trade unions.

The unit's profit more than halved in the fourth quarter of 2018 amid difficult markets, forcing the bank to cut its profitability target and raising the pressure on Chief Executive Frédéric Oudéa, whose 11-year tenure is up for renewal in May.

Société Générale said it expects to complete its restructuring plan by the end of the third quarter of this year.

Write to Noemie Bisserbe at noemie.bisserbe@wsj.com and Ben Dummett at ben.dummett@wsj.com

 

(END) Dow Jones Newswires

April 10, 2019 02:47 ET (06:47 GMT)

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