The fallout from the collapse of Lehman Brothers continued yesterday, as two of Europe's biggest banks came clean on their exposure to the fourth-biggest US investment bank, which went bankrupt in September.
France's third-largest bank, Société Générale, reported an 84 per cent fall in profits on the back of writedowns related to Lehman and to US bond insurers. Meanwhile, Commerzbank became the first German retail bank to ask for state help, taking €8.2bn (£6.5bn) from the Berlin government's €500bn (£400bn) bailout fund to prop up its finances.
SocGen's pre-tax profit in the three months to the end of September fell from €1.12bn to €183m. Its said earnings were hit by a €244m loss at its corporate and investment banking division. The bank has been hard hit by the turmoil in the finance sector, with the collapse of Lehman alone prompting a €447m writedown.
Despite the results, SocGen's share price climbed in Paris after it assured investors it would be able to protect itself against the worsening economic climate.
It has been an eventful year for the Paris-based bank, which found itself at the centre of a scandal in January when a rogue trader, Jerome Kerviel, lost about €5.5bn of SocGen's money by betting on global stock prices.
Last month, the French President, Nicolas Sarkozy, earmarked €360bn to bail out French financial institutions. His government also agreed to loan €10.5bn to the leading French banks, including €1.7bn to SocGen, to encourage them to lend more to businesses and kick-start the economy.
Commerzbank, Germany's second-largest, lost €1.1bn in the credit crisis and posted a third-quarter loss of €285m with operating losses of €475m.Reuse content