Société Générale is struggling to put the effects of a $7 billion trading scandal behind it.
The giant French bank went to the market today to raise nearly $8 billion in stock. But it is having to do so at a steep discount—39 percent below its closing stock price on Friday. A discount of as much as 30 percent had been expected.
"The price is very low," Pierre Flabbee, an analyst with Kepler Equities in Paris, told Reuters. "The feedback from the market cannot have been very encouraging."
Société Générale's experience may be a bad omen, says Douglas A. McIntyre on the blog 24/7 Wall St. "It also speaks volumes about what will happen if big U.S. money center banks and brokerage houses have to go back to the market for money this year," he says.
But Pierre Briançon on Breakingviews.com says the SocGen sale was no fire sale—"more a recognition of reality."
The price of the stock sale, he says, is less than seven times earnings for Société Générale this year. That gives it a multiple roughly that of the stock price of its larger rival, BNP Paribas.