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SocGen expects US settlement 'in weeks,' deputy CEO says provisions sufficient

Société Générale SA expects to reach a settlement with U.S. authorities over two legal disputes in the coming weeks and believes that its €1 billion of provisions for the two cases are sufficient, its deputy CEO said March 21.

"We have a view that we are entering into a more active discussion and negotiations, meaning that the settlement could be a question of weeks," Severin Cabannes told a financial conference. The bank has set aside €1 billion for the two cases, which "under IFRS 9 rules this reserve is the best estimate we have," he said.

One of the U.S. cases relates to the alleged rigging of the London and Euro interbank offered rates, known as LIBOR and EURIBOR. The other is related to transactions with the Libyan Investment Authority.

SocGen has a third case pending in the U.S. over sanctions-busting, and Cabannes said the bank was expecting a settlement in the coming weeks and months in line with previous statements, adding that the total €2.3 billion provisions set aside for the three cases was "its best estimate."

SocGen said in a surprise announcement March 14 that one of its deputy CEOs, Didier Valet, was leaving the bank, and local press reports said the departure was because of the rate-rigging case.

Cabannes also said the bank would target small, high-growth acquisitions going forward, in line with its 2017 acquisition of the 50% of life insurance company Antarius it did not already control.

"We are ready with a limited amount of capital to accompany our growth," he said, adding that the group would target small acquisitions that would offer "real strength."

Cabannes said the bank was also targeting a common equity Tier 1 ratio — a key measure of financial strength — of 11.5% in 2018 and that it expected a "manageable" impact from the revised Basel III global banking standards of a €38 billion increase in risk-weighted assets on credit and operational risk from 2022.