How do you rack up billion euro losses for your company and still keep your job? The answer is find someone to blame and have the PR office of the company divert the attention of the world´s press.
We are currently witnessing the conversion of a medium level bank employee with medium ability, according to those that knew him, into one of the greatest current evils of the world financial markets. Meanwhile, Société Generalé senior executives are working feverishly to divert attention from closer to home.
In his press conference announcing these losses, Daniel Bouton, President of Societé Generalé, spoke much about Jérôme Kerviel and about what he did wrong. Mr. Bouton did not talk much about how he and his senior executives allowed what happened to occur.
It is high time for Societé Generalé shareholders to call senior executives of Societé Generalé to account and show that heads roll when failures occur.
Being France, where who you know in the ministries is more important than shareholder concerns, I am not hopeful that these failures will have consecuences.
Onésimo Alvarez-Moro
See article:
An astounding €4.9 billion fraud
Trouble had been expected but nothing like this. Widespread concerns that Société Générale, France’s second-largest bank by market capitalisation, had more subprime-related woes to reveal were proved right on Thursday January 24th, with the announcement of a €2.05 billion ($3 billion) write-down on its exposure to mortgage-related investments and to creaking bond insurers. But those numbers were a sideshow to something far more shocking.
The bank also revealed that a single trader had racked up a further €4.9 billion loss by taking unauthorised bets on futures linked to European stockmarkets. Trading in SocGen’s shares were suspended on Thursday morning but it will not escape punishment.
The bank can at least claim to have acted quickly. The fraud was discovered on January 19th and the positions were quickly unwound. The trader, Jérôme Kerviel, who is 31 years old, has been sacked and now faces legal action. His supervisors are also picking up pink-slips. The bank also swiftly announced plans to repair its tattered balance sheet by raising €5.5 billion-worth of shares in a rights offer underwritten by JPMorgan and Morgan Stanley. Despite a precipitous fall in earnings—SocGen expects its 2007 profit to stand at just €600m-800m—the bank affirmed plans to pay a dividend.
See full Article.
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