(Bloomberg) -- Societe Generale SA cut a key profit target and will shrink its markets business after trading revenue plummeted, adding to woes in the French banking industry after BNP Paribas reported the steepest decline in equities revenue in years.

SocGen will review less profitable fixed-income and currencies activities after a 29 percent slump in revenue in the fourth quarter, while seeking to maintain its position in equities derivatives, it said on Thursday. The Paris-based bank is replacing global markets head Frank Drouet and cutting about 8 billion euros ($9.1 billion) of risk-weighted assets to combat the slump.

SocGen follows rivals in slashing forecasts and deepening cuts after a grim quarter for European investment banks because of whipsawing markets. The bank trimmed its return on tangible equity target -- a key performance indicator -- by as much as 2.5 percentage points and said it will make 500 million euros of cost cuts by 2020. That follows similar cuts by BNP after it reported a 70 percent slump in equities trading, the worst performance of the large investment banks.

Chief Executive Officer Frederic Oudea, one of the longest-serving CEOs in European banking, is trying to shrug off a track record of disappointing investors. After missing its two previous sets of multi-year financial targets, he’ll need to convince investors he can now meet the bank’s remaining target of strengthening capital and fixing the trading and French retail businesses after declines. He’s also moving to speed up asset sales to boost capital, recently selling retail businesses in countries such as Bulgaria and Poland.

SocGen’s targets, presented just a little over a year ago, are based on progressive dividend growth, improved profitability, revenue growth and 1.1 billion euros in annual cost savings by next year, including hundreds of branch closures and thousands of job cuts at the French retail networks. The new cost-cutting measures are on top of existing efforts and may include further employee reductions, people familiar with the matter have said.

But the economic and interest-rate environment has since worsened, with SocGen saying that geopolitical uncertainty and slower economic growth will likely shave 500 million euros off expected revenues next year as interest rates remain low for an extended period. BNP Paribas announced 600 million euros in additional cost reductions after it was among the hardest hit by the stock market rout.

SocGen cuts its 2020 return on tangible equity target to between 9 percent and 10 percent, down from an earlier target of about 11.5 percent. Equities trading was one of the brighter spots of the quarter, with revenue at 550 million euros beating analyst estimates.

SocGen said it will pay a stable dividend of 2.20 euros for 2018 -- the floor it had promised in its strategic plan -- and will offer a stock alternative. The bank’s common equity Tier 1 ratio was 11.2 percent at the end of December, with the bank saying it will comfortably reach its 2020 goal.

Oudea reorganized his top management and hired senior traders from Bank of America Corp. last year to help reboot the bank’s global-markets business after the shock departure of investment-banking boss Didier Valet. SocGen’s board last year took the step of proposing a new four-year term for the CEO, and shareholders will vote on that at their annual meeting in May.

SocGen is considering closing its proprietary-trading unit, people familiar with the matter said last month, following a similar move by BNP Paribas SA. SocGen executives are reviewing the future of the Descartes Trading division, which makes risky bets with its shareholders’ funds, said the people, who requested anonymity as the details are private.

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fabiobv@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, David Scheer

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