PARIS – Société Générale SA said Thursday it had reached an agreement with the Libyan Investment Authority to settle claims that the French bank paid a middleman $58.5 million in alleged bribes to secure almost $2 billion in business from the sovereign-wealth fund during the final years of dictator Moammar Gadhafi's rule.
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The fund accused the French bank of defrauding the institution through a series of complex financial derivative deals that were unprofitable for the LIA, according to court documents filed in 2014 with London's High Court.
The bank said it regretted the "lack of caution of some of its employees."
"Société Générale apologizes to the LIA and hopes that the challenges faced at this difficult time in Libya's development are soon overcome," it said in a joint statement with LIA.
The terms of the deal weren't disclosed.
The French lender booked a EUR350 million provision for litigation, pushing net profit lower in the first quarter.
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Société Générale said Thursday that net profit fell 19% to 747 million euros ($816 million) in the three months through March, from EUR924 million a year earlier. That undershot analysts' expectations of EUR776 million, according to data provider FactSet. Revenue was, however, up 5% at EUR6.47 billion.
Like French rival BNP Paribas SA, Société Générale benefited from a rebound in bond trading.
Société Générale's global banking and investor-solution business--which includes investment banking, security services and asset management--posted a 60% jump in net profit to EUR383 million, excluding one-off items. In the same quarter last year, Société Générale received EUR218 million from the European Commission after it reduced its fine against the French bank for allegedly rigging the euro interbank offered rate.
Net profit for its international retail banking and financial services division was also up 44% at EUR433 million, lifted by Central and Eastern Europe and Africa.
But a tepid economy, home loan renegotiations and low interest rates pushed net profit for Société Générale French retail bank 3% lower at EUR319 million.
The bank continued to improve its capital buffers, raising its core Tier 1 ratio--which compares top-quality capital such as equity and retained earnings with risk-weighted assets--to 11.6% in March from 11.5% in December.
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(END) Dow Jones Newswires
May 04, 2017 02:23 ET (06:23 GMT)