* Net income down 42 pct, misses forecasts
* Deputy CEO says deleveraging pain to ease
* Says no allegation of Libor wrongdoing, checks were made
* SocGen confident it will hit Basel III end-2013 targets
(Adds detail, background)
By Lionel Laurent and Matthieu Protard
PARIS, Aug 1 French bank Societe Generale
reported a worse-than-expected 42 percent drop in
second-quarter earnings on Wednesday, hit by one-off write-downs
on U.S. fund unit TCW and Russian subsidiary Rosbank.
France's No. 2 listed bank is more than halfway through a
plan to slash debt and sell assets at its corporate and
investment bank. It is under pressure to beef up balance-sheet
strength and sources have told Reuters a sale of TCW is close.
Net income fell to 433 million euros ($533.3 million),
missing the average of analyst estimates of about 677.9 million
according to a Reuters poll. Revenue fell 3.6 percent to 6.27
billion euros, better than the poll average of 6.13 billion.
In addition to write-downs totalling 476 million euros,
which SocGen blamed on the worsening environment for fund
managers in the case of TCW and a strategic overhaul at Rosbank,
SocGen took a hit on the cost of selling assets to cut debt.
SocGen Deputy Chief Executive Officer Severin Cabannes told
Reuters Insider television it was difficult to make forecasts in
the current environment but said the pain of asset sales would
ease. He refused to say whether TCW was up for sale.
"We will continue to deleverage (but) at a lower pace than
the two previous quarters," he said. "It will still have an
Commenting on how the European Central Bank might revive
confidence amid the euro debt crisis, Cabannes said that overall
liquidity in the euro zone was "good" and that a third wave of
cheap loans to the banking sector was unlikely.
He said other measures such as asset purchases would give a
SocGen said it was confident it would hit an end-2013 target
of a Basel III core Tier 1 ratio of between 9 and 9.5 percent.
Cabannes said SocGen was cooperating with authorities
investigating the Libor rate-fixing scandal, which has rocked
the industry and cost the job of top Barclays
No allegations of wrongdoing have been made against SocGen
after the bank answered regulators' questions, he told Reuters
"We are continuing to cooperate," he said.
Asked whether internal checks had been made, he replied: "To
address the requests from the regulators we have to do internal
requests (for information)."
SocGen's corporate and investment bank, which has cut back
on risk since a huge rogue trading loss in early 2008 hammered
its reputation, saw second-quarter profits sink 70 percent.
The impact of the global economic slowdown, the cost of
selling loan portfolios and losses from toxic assets left over
from the last financial crisis all weighed, said SocGen.
Rivals have also felt the pain of euro zone turmoil:
Deutsche Bank said last month it would cut 1,500
investment-banking jobs after a profit slump, while
Switzerland's UBS swung to an investment-banking loss
in the quarter.
Investors will be watching to see whether SocGen's domestic
arch-rival BNP Paribas held up better when it reports
results on Thursday. The bank is seen clearing a key regulatory
capital hurdle, stealing a march on SocGen in the early stages
of an industry-wide race.
($1 = 0.8120 euros)
(Editing by James Regan and Helen Massy-Beresford)