Banks are in trouble still.

Despite banks in the United States making record profits, the world’s economy is still in dire straits. We recommend that you pull all your money out and convert it to Chinese RMB and then stuff it in your mattress today.

Shares in Societe Generale sank as much as 6% Wednesday after the French bank warned that it would take another 1.4 billion euros ($2.02 billion) of charges on risky mortgage assets, virtually wiping out its profit for the fourth quarter.

In a brief trading update, the bank said it had again marked down the value of its mortgage holdings to reflect rising loss rates on both prime and subprime loans.
The latest charge offset a solid performance in retail and private banking as well as a capital gain of around 600 million euros following the merger of the bank’s asset management arm with that of Credit Agricole (PARIS:FR:ACA) .

SocGen (PARIS:FR:GLE) said it now expects to generate just a “slight profit” in the quarter. Analysts polled by Bloomberg had been expecting the bank to report net income of 850 million euros.

Shares in SocGen, which is the first major European bank to provide a fourth-quarter trading update, fell 3.8% on Euronext’s Paris market, having dropped as much as 5.9% in early trading. The stock is up around 44% from a year ago, but is still down around 65% from its peak in early 2007.

Other European banks also declined Wednesday, with BNP Paribas (PARIS:FR:BNP) dropping 1.9% and UBS (SIX:CH:UBSN) (NYSE:UBS) losing 1.4%.
Fixed income slows

On top of the latest mortgage charges, SocGen said it will take a 100 million euro hit from the changing valuation of credit defaults swaps. In addition, it expects to report a slowdown in earnings from corporate and investment banking, especially in the fixed-income side of the business.

The weaker result reflects both lower investor activity since November and less favorable market conditions, the bank said. However the unit has made a more encouraging start to 2010, it added.