Societe Generale board meets to discuss 'rogue trader' fallout

The board of scandal-marred French bank Societe Generale met today as its top executive came under intense pressure over the loss of billions of euro blamed on a rogue trader.

Chief executive Daniel Bouton said his offer to resign, first made as the trading crisis unfolded last week, remains on the table – a proposal likely to be discussed by the board.

The bank’s management also must cope with new accusations by the trader, 31-year-old Jerome Kerviel, who told investigators that his bosses turned a blind eye to his questionable trades as long as he brought in money for the bank.

Patrick Ollier, the conservative head of the National Assembly’s economic affairs committee, said on French radio that Mr Bouton’s “days as CEO are numbered” and that management must change.

Amid concerns that a gem of France’s banking industry is in jeopardy and vulnerable, prime minister Francois Fillon said his government would seek to block any hostile bid for the bank.

The head of the Bank of France was to be questioned by the Senate today amid increasing questions about oversight of French banking system.

Pressure intensified with the publication of a transcript of investigators’ questioning of Kerviel, whose spiral of trades ended in a loss of nearly €5bn for Societe Generale.

Kerviel was questioned by police and then presented to judges who lodged preliminary charges of breach of trust, forgery and unauthorised computer activity against him. If tried and convicted on those charges, he faces up to three years in prison and hefty fines.

He insisted that his primary concern was “earning money for my bank”, not personal enrichment.

The bank and prosecutors also say he did not appear to have pocketed money from the massive positions he built up betting on futures in European equity markets.

The bank has acknowledged that Kerviel triggered alarms with his transactions “from time to time”, but also said that he explained them away as trading errors, and that his mistakes did not outnumber those of other traders.

But Kerviel told police that other traders and managers concealed some of their trading practices. He claimed that “several alerts (were) sent to my superiors” in 2007, in the form of e-mail queries about his transactions.

Kerviel acknowledged he purposely deceived his bank to hide his trades and admitted forging e-mails and using colleagues’ computer log-ins. He claimed he was €1.4bn in the black by the end of 2007 but did not know how to explain the huge sum to his bosses – so he hid it with an equal amount of fictional losses.

According to five routine declarations published this week by market watchdog AMF, Societe Generale board member Robert Day and his family’s trusts and foundations sold shares in Societe Generale on January 9, January 10 and January 18. The sales came to a total of €140m.

Regulators made no allegation of wrongdoing. A lawyer for a group of Societe Generale shareholders has filed a legal complaint asking investigators to look into possible insider trading.