SocGen to face shareholders
PARIS, May 27 (Reuters) – Societe Generale faces shareholders for the first time on Tuesday since rocking markets in January with the world’s biggest rogue trading scandal, still uncertain whether the trader involved acted alone.
The shadow of Jerome Kerviel, the trader blamed for $7.7 billion of losses, will loom large as France’s second-biggest listed bank holds its annual meeting near its headquarters in Paris’ La Defense business district.
On Jan 24, SocGen unveiled 4.9 billion euros ($7.72 billion) of losses which it said were caused by rogue deals carried out by Kerviel.
The size of the losses eclipsed those of previous trading scandals, such as Nick Leeson’s rogue trades which brought down British merchant bank Barings in 1995.
SocGen said on Friday that Kerviel may have been helped by an assistant, but added there was no conclusive proof of this. The possibility of collusion would need to “be confirmed by the courts”, it said.
Kerviel was freed from prison in March after an appeal against his detention, but he remains under formal investigation for breach of trust, computer abuse and falsification.
The position of executive chairman Daniel Bouton, severely criticised over the affair, is not up for vote at the meeting although shareholders will decide on whether or not to renew the mandate of deputy chief executive Philippe Citerne.
SocGen has published two internal reports on the investigation into how Kerviel managed to bypass risk controls to build up a trading position worth 49 billion euros — more than SocGen’s own stock market value.
Its second report published last week blamed weak supervision and poor control systems for the trading scandal.
SocGen did not discover Kerviel’s unauthorised trades until Jan. 18, even though the bank’s internal reports showed that Kerviel had in 2007 raised alarms with derivatives exchange Eurex and been the subject of more than 70 “alert” warnings.
The bank’s report said Eurex raised an alarm in November when Kerviel bought 6,000 DAX share futures contracts worth 1.2 billion euros, betting on a broad rise in share prices, in just two hours.
The losses from the Kerviel scandal have made SocGen vulnerable to a takeover bid and forced the bank to raise 5.5 billion euros in capital to shore up its finances.
French President Nicolas Sarkozy has also criticised SocGen chairman Bouton over the affair. Bouton recently gave up his chief executive position to former SocGen finance director Frederic Oudea.
SocGen shares were down 1.1 percent at 65.95 euros in early morning trade, giving the bank a stock market value of around 31 billion euros.