Paris: Societe Generale SA settled a legal dispute with the Libyan Investment Authority over alleged bribery for €963 million (Dh3.8 billion, $1.05 billion), averting a trial and prompting a surprise drop in first-quarter profit.

The French bank and LIA reached an agreement to resolve “all matters between both parties” related to five transactions that took place between 2007 and 2009, according to a statement Thursday. The court case, following allegations of corruption and bribery, was scheduled to start in London today after two delays this week. A similar lawsuit against Goldman Sachs Group Inc was thrown out by a London judge six months ago.

The case hinged on a $58.4 million payment made by Societe Generale to a businessman called Walid Al Giahmi in order to secure investment deals. The LIA, which manages Libya’s oil profits and has assets of more than $60 billion, sought to claim losses of about $1.5 billion. The group alleged the payment was a bribe, used to influence its employees, making the trades invalid. The bank had denied wrongdoing, saying the money was for introductory services and market research.

Net income fell to €747 million ($813 million) from €924 million a year earlier, the Paris-based bank said Thursday. That missed the €863 million average estimate of six analysts surveyed by Bloomberg. The bank in the statement apologised to the LIA and said it regrets the “lack of caution” of some of its employees.

The deal allows the French lender’s executives to avoid testifying in court about payments that are part of an investigation by the US Department of Justice into whether banks, hedge funds and private equity firms violated anti-bribery laws in Libya. Three senior executives were granted permission to testify behind closed doors, fearing incrimination in that probe, and as many as 50 Libyans had their identities shielded to protect their families back home.

Management reorganisation

Societe Generale, a global leader in equity derivatives, is reorganising its management team and cutting costs as Chief Executive Officer Frederic Oudea, 53, prepares new 2020 targets that will be announced in November. While BNP on Wednesday posted a 33 per cent revenue increase in global markets, other big European peers — Deutsche Bank AG, Credit Suisse Group AG, UBS Group AG and Barclays Plc — had a combined 6 per cent decline in dollar revenue from trading in the quarter.

Societe Generale’s global-markets and investor services revenue jumped 8.3 per cent in the first quarter from a year earlier. The bank cited “’good rates and credit activity,” with “strong client appetite for structured solutions,” according to a slide presentation. Income from trading stocks rose 4.1 per cent, while fixed-income revenue jumped 12.8 per cent, though BNP Paribas posted 30 per cent-plus increases for both businesses.

Operating expenses rose 2.6 per cent from a year earlier to €4.2 billion, while income at Societe Generale’s French consumer-banking unit dropped 1.3 per cent to €2.06 billion in the quarter, matching the average of analyst estimates compiled by Bloomberg News.