Siemens does flip-flop over SocGen funds

Elizabeth Fournier
ENGINEERING group Siemens fluctuated between denial and uncertainty yesterday, as it addressed reports that it had withdrawn more than €500m (£435m) in cash deposits from Société Générale and moved it to the European Central Bank (ECB).

Shares in the French bank fell 6.6 per cent by lunchtime yesterday after it was named as the institution that Siemens had deserted in favour of the ECB, despite early reports suggesting the German group had denied the story.

But a Siemens spokesman in Munich then told City A.M. that no statement of denial had been issued, and that it would be making no further comment on the transferring of funds.

Siemens currently has up to €6bn in one-week deposits at the ECB, which was last week paying a 1.01 per cent interest rate on funds that could be withdrawn with seven days’ notice.

At the same time, Eurozone banks were paying an average of 0.95 per cent on overnight deposits.

French banking sources later said that the transfer was due to the underperformance of a specific Société Générale investment vehicle, rather than any concerns around the overall financial health of the bank.

Two of France’s biggest banks – SocGen and Crédit Agricole – had their long-term credit ratings downgraded by rating agency Moody’s last week, which cited concerns over their risk exposure to Greece.

Siemens is one of a limited number of corporates that is allowed to deposit funds with the ECB, after it applied for a banking licence last year so it could expand into financial services.

Shares in Société Générale closed 3.08 per cent down at €17.15.