SocGen Agrees to Pay $585 Million to Settle Libya Bribery Probes

TRIPOLI (Capital Markets in Africa) – Societe Generale SA will pay about $585 million to resolve probes into the bribery of Libyan officials, and settled a U.S. investigation into interest-rate manipulation, drawing a line under two of the French bank’s biggest legal headaches.

A French prosecutor told a court in Paris on Monday that SocGen agreed to pay 250 million euros ($292 million) to settle a bribery probe regarding payments to officials at the Libyan Investment Authority. The lender agreed to pay a similar amount to settle a related case in the U.S., the prosecutor said. The resolution of the U.S. case could be formally announced later Monday or on Tuesday.

Financial Prosecutor Eliane Houlette said the French settlement “sends a strong signal” and “upholds the need for social justice.”

SocGen also agreed to pay undisclosed penalties to resolve a U.S. investigation into whether it submitted misleading numbers for the London interbank offered rate. The penalties are fully covered by existing provisions, the lender said, without giving further details. The bank was nearing an agreement to pay as much as $1 billion to end the probes, people familiar with the matter said last month.

“It’s good news for SocGen,” said Francois Chaulet, who helps manage about 500 million euros at Montsegur Finance in Paris. “It should reduce concerns over their legal risks.”

Profit Target
SocGen joins lenders including Deutsche Bank AG and Royal Bank of Scotland Group Plc that paid billions of dollars in fines to settle such charges. For Chief Executive Officer Frederic Oudea, at SocGen’s helm since 2008, resolving the issues removes an important area of uncertainty for the bank as he works to meet ambitious 2020 targets for profitability and revenue growth.

SocGen rose 1.5 percent to 38.10 euros in Paris trading as of 3:37 p.m, among the biggest gains in the Euro Stoxx Banks Index. That came after news of the settlement and a report in the Financial Times on Sunday that the bank is considering a merger with Italian rival UniCredit SpA. SocGen denied there are any discussions on a tie up.

Management Shakeup
Talks to end the Libor and Libyan probes, started under President Barack Obama, intensified over recent months, and Didier Valet, appointed deputy CEO at the start of 2017, stepped down on March 14 as the bank worked to resolve the matter. His departure was to help avert restrictions that could be placed on SocGen’s U.S. businesses, a person familiar with the matter said in March.

Rather than just replacing Valet, SocGen went for a broader management shakeup. Deputy CEO Severin Cabannes is taking over Valet’s investment-banking responsibilities, while SocGen also appointed three new deputy CEOs. That followed a disappointing first quarter for the bank in its key equity trading division.

U.S. prosecutors had collected documents suggesting that SocGen executives were aware that its bankers were submitting fake U.S. dollar Libor rates, Bloomberg News reported in November. The misleading numbers made bank borrowing costs look lower than they actually were.

The Libya probe was the first time that the French authorities had partnered with the Justice Department in a case of such magnitude and complexity. Under a 2016 French law, the country’s prosecuting authorities received expanded powers to fight financial misbehaviour, including a new settlement procedure.

Source: Bloomberg Business News