Societe Generale scraps dividend on Greek write-down

French bank Societe Generale said on Tuesday it was scrapping its 2011 dividend and making a "significant" cut to bonuses after a tough third quarter owing to a Greek debt write-down. The market welcomed this clearing of the decks and SocGen shares surged 8.80 percent to 19.53 euros on Paris's benchmark CAC 40 index at 0920 GMT. Third-quarter net profits were down 30.6 percent to 622 million euros ($856 million), Societe Generale, France's second-largest banking group, said in a statement. Faced with a European Union requirement to boost its core capital ratio to nine percent of overall assets by the end of June, the bank said its board would propose not distributing a dividend for 2011. "We are giving priority to the strengthening of the group's capital," CEO Frederic Oudea said in the statement, adding that this year would also see "a significant decline in performance-linked pay." Like larger French rival BNP Paribas, the bank said it had written down 60 percent of the amount of Greek sovereign debt it holds, the equivalent of 333 million euros before tax. Under a deal reached with eurozone leaders last month to tackle the ballooning Greek debt crisis, banks have agreed to write down at least 50 percent of the debt owed by Greece and to boost their capitalisation. The bank said that it needed 2.1 billion euros, against an initial estimate of 3.3 billion euros, to meet the capitalisation requirement by mid-2012. It said it had sold 10 billion euros in toxic assets between July and November at a pre-tax cost of 121 million euros. And it said it lowered its sovereign debt exposure to the troubled eurozone countries of Greece, Italy, Ireland, Portugal and Spain (GIIPS) to a "particularly low level" of around 3.4 billion euros by the end of October. It said it had halved its exposure to GIIPS sovereigns since the start of the year. Given its moves, SocGen said it was "confident of being able to cover by June 30, 2012 the need to raise additional capital of 2.1 billion euros... through its own resources, without having to make a call on public funds."