Société Générale braced for criticism, Kerviel speaks out

Société Générale was braced for fresh criticism from France’s top central banker on Tuesday as the man the bank blames for its record trading losses spoke out against his former employer.

Bank of France governor Christian Noyer, who last week said he warned Société Générale less than a year ago to improve its market control systems, prepared to address Parliament on the trading scandal that has humbled the French bank.

On January 24, Société Générale unveiled €4,9-billion ($7,3-billion) of losses which it said were caused by rogue deals executed by Jerome Kerviel, a 31-year old junior trader at the French bank.

Kerviel is under police investigation and on Tuesday he told French news agency Agence France-Presse (AFP) that he would not be turned into a ”scapegoat”.

”I take my share of the responsibility but I will not be turned into a scapegoat of Société Générale,” he was quoted as saying.

Kerviel was questioned again by magistrates for eight hours on Monday, a judicial source told Reuters, and he faces possible criminal charges.

French Economy Minister Christine Lagarde said on Monday the trading debacle highlighted major failings in Société Générale’s systems. She said France would seek stricter risk controls for financial institutions and impose far tougher penalties on banks that failed to police them effectively.

Bid talk lingers

Société Générale shares were down 1,3% at €82,50 in mid-afternoon trade, giving it a stock market value of around €38-billion.

As a result of the trading losses, the bank plans a €5,5-billion euro capital increase that has been fully underwritten by JP Morgan and Morgan Stanley. Analysts expect Société Générale to detail a rights issue later this week.

The trading losses, which will cause a slump in the bank’s annual profits, have turned it into a likely takeover target.

United States investment bank Merrill Lynch said in a research report on Tuesday that it saw a 70% chance of a takeover of Société Générale. Merrill raised its price target on Société Générale to €116 from €90 and reiterated a ”buy” rating on Société Générale shares.

The Merrill Lynch research report also said a takeover of Société Générale could come in the form of a break-up consortium, involving French banks BNP Paribas and Credit Agricole with Italy’s Intesa Sanpaolo.

BNP Paribas narrowly failed to buy Société Générale in 1999.

France’s top politicians have repeatedly expressed their determination to ensure that Société Générale avoids falling prey to a hostile takeover bid by a foreign bank. – Reuters

We make it make sense

If this story helped you navigate your world, subscribe to the M&G today for just R30 for the first three months

Subscribers get access to all our best journalism, subscriber-only newsletters, events and a weekly cryptic crossword.”

Related stories


Already a subscriber? Sign in here


Latest stories

Suicide cases soar in Zimbabwe

The economic crisis in the country appears to be pushing people over the mental edge

OPINION| New UK work visa to exclude graduates from Africa

If graduates did not get their qualifications from the list of top 50 universities, 40 of which are in the US, France, China, Hong Kong, Australia, Germany, Canada and Japan, they will be excluded

Hackers infiltrate SA illicit financial flows conference with porn clip

The conference was attended by state agencies, blue- chip global and local non-governmental agencies and public accountability experts

OPINION| South African audiences want more authentic and accurate diversity...

The media has the power to shape perceptions, so television shows and movies can help shape a positive view of people who feel stereotyped

press releases

Loading latest Press Releases…