SocGen traders: worst in class
SocGen released its fourth quarter and full year results for 2020 this morning. Given the bank's equities losses in the "brutal" first half, they are predictably bad. In some ways, however, they're even worst than expected.
The year-on-year growth in SocGen's equities and fixed income sales and trading businesses relative to rivals is shown in the chart below. Notably, it wasn't just SocGen's equities business that underperformed in 2020: it was fixed income sales and trading at the French bank too.
Nor was there much sign of recovery in the fourth quarter, when SocGen's woes were theoretically behind it. While rivals like Deutsche Bank and BNP Paribas achieved revenue increases in fixed income trading of 17% and 22% respectively year-on-year in the fourth quarter, SocGen's fixed income revenues fell by 16% y-o-y again. SocGen blamed, "spread compression" and declining rates revenues, "due to lower client activity," for the drop. However, only last week BNP Paribas said its markets business had a strong fourth quarter by virtue of: "Strong growth in all businesses, driven by client business volumes and market shares gains."
The upshot is that if BNP Paribas' bonus pool is challenged for 2020, SocGen's is in danger of being almost non-existent. As SocGen cuts jobs in its structured equity derivatives business (112 are going, mostly through expensive voluntary redundancies), it needs to be firing on all cylinders elsewhere.
There's little sign that this is happening, at least not yet.