SocGen may take hit on Egypt ops-KBW analysts
Charge of around 100 mln eur expected by KBW analysts
February 9, 2011 2:51 by Reuters
French bank Societe Generale may take a near 100 million euro ($136.5 million) charge on its business in Egypt as the country’s economy continues to be rocked by protests, analysts at Keefe, Bruyette & Woods said.
French banks are more exposed to Egypt than European and U.S. peers and some analysts expect losses on bad loans to rise as a result of the political crisis, which Credit Agricole estimates is costing Egypt $310 million a day.
Egypt’s banks opened for the first time after a week of closures on Sunday to queues of customers seeking to access their accounts. The Egyptian central bank has intervened to support the Egyptian pound and said it might do so again.
“If there is a material deterioration in Egypt for SocGen, this may well need to be reflected in the full-year 2010 accounts,” said Keefe, Bruyette & Woods analyst Jean-Pierre Lambert, adding he was expecting a charge of 96 million euros.
A spokeswoman for Societe Generale declined to comment. The bank is due to report 2010 results on Feb. 16, with analysts forecasting 3.75 billion euros in net profit according to Thomson Reuters I/B/E/S.
SocGen is the most exposed to Egypt of its French peers via its National Societe Generale Bank subsidiary, with a loan exposure of 3.5 billion euros, according to KBW. Rivals BNP and Credit Agricole have respective exposures of 2.4 billion and 2.2 billion, the brokerage said.
Although Egypt was not in political crisis during 2010, it is possible for a bank to take a retroactive charge in exceptional cases. For example, when SocGen discovered rogue trader Jerome Kerviel’s massive and unauthorised market bets in January 2008, it booked related losses on its 2007 accounts.
(Editing by David Holmes)