SocGen must be cursing its bad luck. Just when Sarkozy, Lagarde and various other compensation curbing dignitaries are converging on Pittsburgh, details of large bonuses paid to some of its traders two years ago have leaked to the French press.
Liberation reports that SocGen paid the heads of two trading desks bonuses of €11m EURO and €9m in 2007.
Even more scandalously, the paper points out that SocGen only paid a financial analyst a €15k bonus for the same period, and that a PA at the bank only got a mere €850. To make matters worse, it says the bonuses in question were entirely subjective rather than based on mathematical formulae.
Libération's indignation is misplaced, on several counts.
2007 was an exceptional year for most banks, and the bonuses paid to those two heads of desk may well have been exceptional within SocGen (which is not known for its generosity). Rivals have been known to pay far more: Goldman reputedly paid Driss Ben-Brahim, its then head of trading, 30m in 2004.
Equally, as the fuss about Andrew Hall's enormous bonus at Phibro goes to show, compensation based on mathematical formulae can be even more incendiary than compensation determined subjectively. And while banks may not pay their juniors and secretaries well compared to their heads of desks, they pay them handsomely compared to most other industries.
The fuss may put further pressure on SocGen not to pay too much for this year, particularly as it has yet to indicate when it will reimburse the French state (unlike BNP Paribas ).
SocGen chief executive Frederic Oudea doesn't seem perturbed. He said earlier this week that he's "not worried" about new French bonus rules repelling employees and that, "We [SocGen] will be able to recruit and retain the talent that we need."
As we have pointed out, however, SocGen doesn't yet appear to have hired any of the senior M&A staff it declared it wanted back in July.