French bank known for huge severance pay finds restructuring horribly expensive
If you're going to get fired from an investment bank, you probably want to get fired from SocGen. The French bank is known for its generous severance payments, which can be as high as €340k ($370k) to induce its managing directors to walk away of their own volition.
Get Morning Coffee ☕ in your inbox. Sign up here.
SocGen isn't commenting, but this might be one reason why its restructuring has generated "colossal" restructuring costs, in the words of CEO Slawomir Krupa. Speaking to the Financial Times, Krupa said SocGen's restructuring costs hit €613m last year as the bank cut staff and sold businesses.
There are more cuts to come. Krupa wants SocGen to achieve a cost income ratio of 60% by 2026, down from a cost income ratio of 69% at the end of 2024. If revenues remain constant, SocGen would need to cut another €2.4bn of costs to meet the 60% target.
Needless to say, this isn't the plan. Krupa's intention is to grow revenues at SocGen by 3% this year and to cut costs there by only 1%, implying a mere €184m in cost reductions in 2025 at least. Some of that revenue increase should come from the sales and trading business, where ex-BNP Paribas trader Francisco, "Chico", Oliveira, is shaking things up.
Krupa's comments to the times suggest this year's reductions won't come from cutting expensive heads. He told the FT the bank's colossal restructuring costs are "disappearing progressively," and that future cost-cutting will instead focus on doing away with consultants and cutting IT costs.
Some people at the bank are nonetheless questioning this strategy. Many of SocGen's senior IT staff have been there for decades. They are presumably very expensive and would merit very high severance pay. The suspicion is that junior developers will be chopped instead.
Photo by Celine Ylmz on Unsplash
Have a confidential story, tip, or comment you’d like to share? Contact: +44 7537 182250 (SMS, Whatsapp or voicemail). Telegram: @SarahButcher. Click here to fill in our anonymous form, or email editortips@efinancialcareers.com. Signal also available.
Bear with us if you leave a comment at the bottom of this article: all our comments are moderated by human beings. Sometimes these humans might be asleep, or away from their desks, so it may take a while for your comment to appear. Eventually it will – unless it’s offensive or libellous (in which case it won’t.)
