SocGen Agrees to Pay $1.3 Billion to Settle Libya, Libor Probes


• Bank says penalties to be paid already covered by provisions
• Agreement in principle reached with U.S. and French regulators


Societe Generale SA will pay about $1.3 billion to resolve a probe into the bribery of Libyan officials and settle a U.S. investigation into interest-rate manipulation, drawing a line under two of the French bank’s biggest legal headaches.

SocGen will pay $585 million to resolve charges with U.S. and French law enforcement agencies related to the Libya investigation and $275 million for violations arising from helping rig the London InterBank Offered Rate. The bank will also pay about $475 million to the Commodity Futures Trading Commission to settle the Libor probe, according to a statement on Monday from federal prosecutors in Brooklyn, New York.

SocGen earlier today announced that it had reached agreements in principle with U.S. authorities and with France’s Parquet National Financier. Legal provisions allocated to the Libor and Libyan matters fully cover the penalties, the bank said in a statement before market hours.

SocGen joins lenders including Deutsche Bank AGand 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.

“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.”

Shares Rise

SocGen rose 0.7 percent to 37.81 euros in Paris trading. 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.

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.

Broader Shakeup

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.

“Today’s resolution sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response,” John P. Cronan, acting Assistant Attorney General of the Justice Department’s criminal division, said in the statement.
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 misbehavior, including a new settlement procedure.

To contact the reporters on this story:
Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net;
Gaspard Sebag in Paris at gsebag@bloomberg.net
To contact the editors responsible for this story:
Dale Crofts at dcrofts@bloomberg.net;
Anthony Aarons at aaarons@bloomberg.net
Jon Menon