SocGen takes $731 million writedown on Russian arm
By Lionel Laurent and Matthias Blamont
PARIS (Reuters) - Societe Generale (SOGN.PA: Quote), France's second-largest listed bank, has written down the acquisition value of Russian arm Rosbank by 525 million euros ($731 million), blaming the economic uncertainty caused by Russia's soured relations with Ukraine.
The writedown adds to the list of European companies to take a hit from the unrest in Ukraine between government forces and pro-Russian separatists, which has led the United States and Europe to impose sanctions against some Russian individuals and entities and to a slide in the value of the Russian rouble.
Danish brewer Carlsberg (CARLb.CO: Quote) on Wednesday blamed the weak rouble and declining eastern European sales for missing first-quarter earnings forecasts.
The writedown to goodwill - effectively the premium paid for an acquisition - marks a blow to SocGen's ambitions in Russia, where it has poured billions into restructuring Rosbank in the face of competition from local state-owned rivals and the 2013 arrest of its top Russian executive on bribery charges.
SocGen said it expected to achieve a "satisfactory" double-digit percentage return-on-equity in Russia in 2016, effectively scrapping a previous target of over 15 percent in 2015, and said it would give an update on its three-year outlook for Russia on May 13.
Russia accounts for 3 percent of SocGen's loan exposure, or approximately 19.5 billion euros at end-December, the bank said.
"There are significant risks for SocGen in Russia," said Francois Chaulet, fund manager at Paris-based Montsegur Finance.
"But the writedown does look more like an accounting gesture ... None of this is insurmountable for SocGen." Continued...