French banks' gloom hits traders as top names weigh bonus cuts

Trimming follows a downturn that’s affected some of the world’s biggest financial firms

BNP, the biggest French bank, reportedly lost $80m in derivative trades linked to the US stock benchmark in 2018. AFP 

The troubles of French banks swept up their traders, with both BNP Paribas and Societe Generale weighing bonus cuts after a downturn that’s hit some of the world’s biggest financial firms.

BNP may hand lower or zero balances to many traders in its global markets unit after posting trading losses and shuttering some businesses, inside sources said.

A majority of staff in credit and rates trading could receive no discretionary awards, they added, asking not to be identified as the discussions are private.

At Societe Generale, steep cuts in traders’ bonus pool could be implemented for the second straight year.

Bonus levels will likely fall as much as a quarter, mirroring the levels of cuts a year ago.

Both banks typically announce bonuses a few weeks after annual results.

BNP Paribas and Societe Generale declined to comment on the matter.

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The likely bonus reductions are the latest bad news from French banks, once renowned for their prowess in complex derivatives and now struggling to navigate increasing risk.

Societe Generale is considering closing its $4.7 billion proprietary-trading unit, a week after news of BNP plans to shutter that business, according to sources.

Societe Generale, France’s third-largest bank, said “challenging” conditions led to a decline of about 10 per cent in annual revenue from its markets units.

Shares of the bank, which will report earnings in February, plunged 5.7 per cent.

It was reported that BNP, the biggest French bank, lost $80 million in derivative trades linked to the US stock benchmark late last year as turmoil gripped global markets, according to people familiar with the matter.

The French banks aren’t alone in suffering from wild markets that have stung traders worldwide.

Morgan Stanley’s fixed-income traders posted their worst results in three years in the fourth quarter.

JPMorgan Chase and Goldman Sachs both missed analyst estimates for trading revenue, while Citigroup reported a 21 per cent slide in fixed-income trading.