14 août 2011 21

Société Générale leveraged: 50!

Rédigé par jp-chevallier dans la rubrique Banques : Banques françaises

The real leverage of Société Générale is… 50!

Document 1:

Indeed, the French bank counts in its equity item 2: Equity instruments and associated reserves which are actually different forms of liabilities related interests subject to some conditions.

Equity published in item 1: Sub-total equity, Group share should be reduced by Equity instruments and associated reserves (item 2) to determine the true equity at fair value (item 3) i.e. 22,535 billion of euros.

Total liabilities are equal to total assets (item 4) less the true equity at fair value (item 3): 1,135.473 billion of euros.

So, the leverage is the ratio of total liabilities on equity: 50.4 i.e. a Tier ratio at 2.0%.

Société Générale did not respect the rules of prudential borrowing as they were defined by Alan Greenspan.

Document 2:

SOCIETE GENERALE20072008200920102011 Q2
Liabilities (published)1,052,0351,093,918981,4971,085,6511,135,473
Equity (published)27,24136,08542,20446,42147,558
Equity instrument etc7,51417,72723,54424,02125,023
True equity19,72718,35818,6622,422,535
µ (leverage)53.359.652.648.550.4
Tier (%)1.91.71.92.12.0

The bank cannot lower the leverage below 50 (even, it was at 60 end 2008!).
To be good leveraged, it should increase the equity until 84 billion of euros!

French state should be recapitalized (nationalized) this Gosbank because it is too big to fail with liabilities at 1.135 trillion of euros for an annual GDP of France nearly at 2.000 trillion: 1,300 € per inhabitant (64 million)!

French (and European) banks have adopted rules of leverage at their convenience, which do not correspond to those internationally adopted. For example, they enter in their accounts, in the equity, quasi-equity which are actually liabilities as these Equity instruments and associated reserves.

Click here to read the latest Consolidated Condensed Interim Financial Statements as at June 30, 2011.

Click here to read the website for investors.

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21 réponses à “Société Générale leveraged: 50!”

  1. [...] http://chevallier.biz/2011/08/societe-generale-leveraged-50/ Advertise with SwamySez Posted in Recent Post SHARE THIS Twitter Facebook Delicious StumbleUpon E-mail Similar posts [...]

  2. [...] http://chevallier.biz/2011/08/societe-generale-leveraged-50/ Advertise with SwamySez Posted in Recent Post SHARE THIS Twitter Facebook Delicious StumbleUpon E-mail Similar posts [...]

  3. [...] last bagholder standing and first to bail from what is obviously a disastrously bad investment.From Chevalier:The real leverage of Societe Generale is … 50%!Indeed, the French bank counts in its equity [...]

  4. Bozzy dit :

    This week or perhaps next we shall find out why the shorting ban is in place – SocGen is just one of the Euro TBTF candidates. Now French Mainstreet is going to need to take a very hard look at why the state should prop up the banks.

    DANSONS LA CARMAGNOLE!

  5. [...] Chevallier reported Société Générale leveraged: 50! The real leverage of Société Générale is… [...]

  6. Xav dit :

    Merci pour l’analyse..

    D’autres tricks que les banques utilisent pour truquer leur chiffre est la survalorisation de leur goodwill (par ex BOfA maintenait encore des milliards en goodwill lies a l’acquisition de countrywide il y a a peine 1 an) voir des deferred tax assets (qui peuvent etre utiles pour une entreprise qui gagne vraiment de l’argent mais pas pour une en perd)

    Ca serait bien que tu rajoutes une update la dessus.

  7. Dmitry Golubev dit :

    Vous pouvez être intéressé par cet:
    http://www.liveinternet.ru/users/4114756/post180304306/

  8. [...] numbers are worrying, but not as bad as earlier reported.Fresh calculations have been provided by Jean-Pierre Chevallier, who is an independent financial analyst and have been highlighted [...]

  9. Amaury dit :

    Il semble que la Société Générale ait publié un communiqué pour contredire vos chiffres cher JP Chevallier.

    http://www.forexcrunch.com/societe-generale-leveraged-more-than-lehman/

  10. Mario Lodos dit :

    So, you are not taking into account these ‘Equity instruments and associated revenues’. This includes the issuing premium, which is the added value (over the nominal value of the shares) on capital increases, so you are implying that SocGen’s capital includes only retained earnings and nominal value of the shares… Why are not you applying the same correction on your BNP ratio? Appart from that, and considering your exquisite treatment of the figures, you must deduct from the total assets the net value of derivatives, like 200 Bn… Please, start by knowing well the basic accounting rules before delivering such an agressive conclusion.

  11. [...] leveraged over 27 times relative to equity. Even more shocking, Société Générale is leveraged 50 times their true equity at fair value, according to Chevallier.Needless to say, these do not represent [...]

  12. [...] reported by the banks. For instance, Societe Generale says its leverage is 28:1, although there are totally different calculations.And this is the worst part that talks about the institutional bank run and that retail accounts [...]

  13. Jean-Luc dit :

    I’m a customer of Societe Generale
    I’m wondering what would happen if it was to fail…

  14. [...] The original links are here and here. The fines are likely to be around EUR10,000. Not too high, but still way too [...]

  15. [...] I also cited Chevallier’s Société Générale leveraged: 50! [...]

  16. [...] about the indebtedness” of SocGen. The sinful act: On August 14, 2011, Chevallier posted an analysis (in English) of SocGen’s financial statements that came to the conclusion that the bank’s [...]

  17. [...] rumors about the indebtedness of SocGen. The sinful act: On August 14, 2011, Chevallier postedan analysis(in English) of SocGens financial statements that came to the conclusion that the banks leverage [...]

  18. [...] 14 août, Jean-Pierre Chevallier, ancien professeur de finance à la retraite, publie sur son blog un billet en anglais commentant le bilan diffusé par la Société Générale, celui-ci sera repris sur le blog de Mike [...]

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