Europe's banks report dismal FICC results

PARIS - Société Générale's fixed-income, currencies and commodities division saw income drop by 7.7% in 2008.

The annual loss from the division totalled €953 million ($1.2 billion) compared with €885 million in 2007. However, these figures discounted huge losses incurred within the corporate and investment banking group from "non-recurring" items. These included €2.3 billion in writedowns on assets at risk, €1.2 billion writedowns on monoline and credit derivatives product companies exposures and €494 million from the collapse of financial institutions.

Revenues from the FICC division, again discounting the non-recurring items, were impressive, with a 36.6% climb to €2.5 billion. The bank said this resulted from wide bid/ask spreads and the withdrawal of some players from the market.

At Commerzbank, the corporates and markets group suffered full-year losses of €583 million, against a €23 million profit in 2007. One key factor was the loss in trading income for the fourth quarter last year, which was minus €309 million versus a positive €125 million in the fourth quarter 2007. The German bank said this was due to the credit-trading business losing €271 million over the full year. The foreign exchange business benefitted from "high market volatility" but the bank declined to provide any figures.

The bank also revealed that, because of the overall results, where net profit slumped from €1.9 billion in 2007 to €3 million last year, no bonuses will be paid to staff for 2008. "Nevertheless, we have to reward employees individual extra payments acknowledging their contribution and individually agreed salary components will also be settled," said Eric Strutz, chief financial officer of Commerzbank, based in Frankfurt.

Dutch outfit ING completed a hat-trick of disappointing European results with a fourth-quarter loss of €119 million in the financial markets section. In 2007, it lost €12 million. In an attempt to cut costs for 2009, the banking group will slash 2,800 jobs, with half of those coming from within wholesale banking.