Other banks and the French taxman stand to make hundreds of million of dollars as Société Générale boosts its capital with a deeply discounted rights issue after rogue trading and United States subprime losses.
An official at the bank said on Monday the company would have to pay taxes on a €1,4-billion ($2,04-billion) capital gain the trader in the eye of the storm, Jerome Kerviel, made in 2007 before the size of his unauthorised dealings came to light.
Société Générale posted a €4,9-billion net loss after it unwound Kerviel’s positions over two and a half days while world markets tumbled on recession fears.
France’s second-biggest listed bank and number 12 in Europe launched on Monday a €5,5-billion cash call. The prospectus shows it will pay €143-million in fees to banks running the capital increase, or 2,6% of the amount while this is normally between 1,5% and 2%.
When rival BNP Paribas raised €5,5-billion to pay for the acquisition of Italy’s BNL in 2006, it paid a total of €86-million in fees or 1,6%.
Société Générale is also giving investors a hefty discount of nearly 40% on its rights issue — compared to a 15,5% discount on the BNP deal in 2006. – Reuters