Redundancy plan: Société Générale to join the party

The announcements of job cuts in investment banking continues. After a year fueled by rumors, Société Générale has officially announced the implementation of a voluntary departure plan for approximately 880 investment bankers ...

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The management of Société Générale has announced to have signed on wednesday january 4th, an agreement with the Group’s most representative trade unions, outlining a series of social measures aimed at accompanying the project of reorganisation of the Ciorporate and Investment banking division and adaptation of its staff.

Layoffs at Société Générale: a hidden redundancy plan?

That’s the question unions have been facing after the sharp increase in layoffs made by the investment bank this summer...

The plan targets approximately 1500 job cuts worldwide, including 880 in France. According to the management, this agreement foresees a series of support measures and social guarantees for employees whose jobs are targeted by potential adjustments, which will then be submitted for information and consultation with the competent workers’ councils.

This move is far from a surprise. Indeed, many rumors were already circulating in the wake of numerous layoffs last summer. A nickname, "Romeo" has even been given to an informal plan of downsizing. The bank puts an end to all speculation with this agreement on voluntary departures without layoffs and forced departures, and which gives priority to internal mobility within the Group with the support of a Reclassification and Job Advisory Area ("Espace Conseil Reclassement et Emploi), enhanced training opportunities as well as help for the transition to new career opportunities.

A redundancy plan that is not new....

If the bank does not provide specific details on the plan, you can probably imagine that the terms will be quite similar to those of the original plan proposed in 2009 to employees of , SGAM AI (former alternative management subsidiary) following its merger with Lyxor (currently a subsidiary of Société Générale CIB). The philosophy was identical and the conditions included:

  • A breakdown of employees between those directly elligible to departure (canceled position) and the others (not canceled position) whose eligibility were subject to an exchange with a direct eligible employee
  • A departure conditioned by reclassification (new job, a personal or business project or even the completion of a complementary training program)
  • Front office had the lion’s share of directly eligible employees, with a severance pay calibrated on income earned in the 12 months preceding the effective date of the plan and seniority within the group (about one month of income per semester of service)

This last point can potentially include the choice of departure date: April 2012, just after the traditional month of March and the payment of "bonus". This can allow the group, which is likely to pay "bonus" insignificant or null (in line with the elimination of the dividend and the current banking environment) to minimize the income received in the last 12 months. In addition, the tax law on social ruptures conventional and plans to evolve and the impact could be significant for employees on the move

Collateral damage to be expected ...

Do the layoffs at Crédit Agricole represent a sharp decline in French banks?

The layoffs have unquestionably impacted the personnel of the French banks but a greater malaise reigns. A top ranked outgoing senior executive considers the current situation as symbolizing an unprecedented weakening of French(...)

Unlike the Crédit Agricole, which has withdrawn from equity derivatives and commodities activities, Societe Generale is just "making concessions". But it will not be pain-free for some activities. Indeed, many consulting contracts (and CSD) found in CIB will not be renewed and it is likely that a wave of redundancy plan will hit the consulting industry as a result of restructuring of banks. Beyond finance, it is also a concern for the world of service, not to mention the many students who continue to dream about finance.

Moreover, given the decisions of both Societe Generale and Crédit Agricole Group, one can not help thinking to employees of joint ventures of the two groups: Newedge or Amundi. So far, nothing official, but there is no doubt that employees are under psychological pressure

a glimmer of hope?

Fortunately everything is not dark. Few opportunities are still open to experienced investment bankers, thanks to "small" new and growth-focused players who hire in major banks. One can mention Kepler Capital Markets or EFG Financial Products. As for the bankers who have developed a strong expertise essential for the functioning of a banking group, they can always become Solo Investment Banker.

Next Finance January 2012

Article also available in : English EN | français FR




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