Fears that the sub-prime crisis will continue to haunt banks this year increased yesterday as Société Générale surprised investors with a fourth-quarter profit warning.

Amid signs that the American property market recovery is running out of steam, France’s second-biggest bank said that risk-laden assets would wipe €1.4 billion (£1.3 billion) off its balance sheet.

The move means that the bank will record a small fourth-quarter profit, way below analyst forecasts of about €1 billion.

A Paris-based analyst, who asked not to be named, said that SocGen was likely to record further writedowns running to several hundred million euros. “We know that Société Générale has a slice of the least protected and therefore the worst type of residential mortgage-backed securities. The accounts still haven’t been completely cleaned up, in all probability, and more writedowns cannot be excluded,” he said.

Arturo de Frias, an analyst at Evolution Securities, said that the French institution stood out among European banks: “We have consistently said that SocGen was the only bank left that still had a significant loss to take in structured credit.”

Other experts, however, said that SocGen’s difficulties pointed to a crisis that remained widespread. “We’re not going to see writedowns involving the ridiculous sums that we saw at the height of the banking crisis,” a French analyst said. “But the view that it’s over is clearly wrong. It isn’t.”

Dominique Strauss-Kahn, managing director of the International Monetary Fund, estimates that 50 per cent of assets made toxic by the sub-prime crisis have yet to be revealed by banks, notably in Europe.

The European Central Bank was only slightly less pessimistic last month when it said that €187 billion of writedowns remained in the pipeline in eurozone banks. It revised its estimate for total eurozone writedowns between 2007 and 2010 to €553 billion, up from €488 billion.

SocGen said that the negative effect of risky assets involved writedowns on collateralised debt obligations linked to residential mortgage-backed securities and changes in the markto-market valuation of credit default swaps.

The move followed “contrasted signals coming from the US residential real estate market in the fourth quarter”, the bank said.

Recent studies have shown that American house price rises were slowing, prompting economists to predict a rise in mortgage foreclosures.

The French bank had already recorded a €1.5 billion hit on risky assets last year, but it seemed to have turned the corner when it announced a doubling in third-quarter profits. It also completed a €4.8 billion capital increase to pay back €3.4 billion in government bailout funds in October.

SocGen has been seeking to recover from its sub-prime exposure and from the fallout from losses approaching €5 billion run up by Jérôme Kerviel, its rogue trader, in 2008.

The scandal forced Daniel Bouton, its chairman, to stand down. He was replaced by Frédéric Oudéa.

Mr Kerviel is due to stand trial in Paris this summer on charges of breach of trust, falsifying documents and tampering with computer information.

SocGen shares closed down 3.4 per cent at €49.88 in Paris.