French executives resign after €600m 'trading incident'

The top three executives at France's Caisse d'Epargne have resigned under pressure from the government after the bank lost €600m trading derivatives amid the worldwide stock market collapse earlier this month.

The auditing board of the bank, one of France's largest, met for several hours Sunday, and late Sunday night announced in a statement the departures of Charles Milhoud, chairman of the management board, CEO Nicolas Merindol and Julien Carmona, head of finance.

Milhaud said he would not accept any severance pay and said in a separate statement that he took full responsibility for the losses, which he called "a consequence of the exceptional volatility of the markets in this period, and of the violation of instructions that the board and myself had given".

The bank announced the loss Friday, saying it happened in equity derivatives trading for its own account and was triggered by the "extreme market volatility" and the market crash during the week of October 6.

The bank said a team of five or six employees "went beyond management orders". It said it had sanctioned those responsible.

President Nicolas Sarkozy pressed the bank's leadership to "take the consequences" of the heavy losses, which come at a sensitive moment.

Last week, the French government put in place a €360bn plan aimed at unblocking credit markets and ensuring the nation's banks do not collapse, part of a Europe-wide rescue effort.

Caisse d'Epargne and another French mutual bank, Banque Populaire, announced plans last week to merge.

The tie-up would make the combined company one of France's biggest banking groups, with a total of €480bn in savings deposits and more than six million customers.