SocGen's results are a reminder that its redundancies have barely begun

If you've kept your sales and trading job at SocGen so far in 2019, then congratulations. However, they may be premature. 

SocGen's first quarter results presentation offers a salutatory reminder that the 1,600 job cuts which have been flagged in its corporate and investment bank (CIB) won't happen all at once. This kind of thing takes time.

By the end of 2020, SocGen is aiming to extract €500m in costs from its global banking and solutions business. It's off to a slow start: today's results reveal that first quarter operating expenses in the division were just €29m lower than a year earlier.

This is no mistake. SocGen's Q1 investor presentation stresses that only 20-30% of its €500m of cost reductions will happen in 2019. The remaining 70% to 80% will be extracted next year. Survival at SocGen therefore looks like long game. 

Some changes are taking place already. The French bank wants to reduce the risk weighted assets (RWAs) allocated to its markets division by €10bn by the end of 2020 and 75% of this reduction will happen in 2019. €2.3bn of RWAs were already taken out in the first quarter.

Morever, SocGen expects to book all the restructuring charges for global banking and solutions this year, suggesting that most of the layoffs will in fact happen in 2019 - just towards the end of the year, so that the resulting cost benefits aren't apparent until 2020.

Today's presentation clarifies the plan for global banking and markets. - The over-the-counter (OTC) commodities business is being closed, as is the Descartes proprietary trading business; SocGen's getting more selective about its prime services clients; and the fixed income and currencies business is being 'downsized.'

It's the downsizing of the fixed income and currencies business that's most likely to be be strung-out. SocGen's fixed income traders may have survived Q1, but this doesn't mean they'll still be around by Q4.

In the meantime, revenues in SocGen's fixed income trading division were down 16% year-on-year in the first quarter, putting the bank at the bottom of the performance class with JPMorgan and Deutsche. This may have been intentional as SocGen closes businesses, but it's a long way from yesterday's exceptional results at BNP Paribas. And it's unlikely to do much for morale at SocGen as traders on long notice periods wait to see what happens next. 

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