Posted on 01/23/2008 11:48:06 PM PST by BurbankKarl
Société Générale has uncovered a fraud by one of its traders which will have a €4.9bn ($7.16bn) negative impact on the group, France’s second-largest listed bank said on Thursday.
The bank also announced further writedowns of €2.05bn related to the global credit crunch and said it would raise €5.5bn through a capital increase to strengthen its balance sheet.
The bank said it was in the process of dismissing the Paris-based trader and added that the trader’s managers would leave the company.
The fraud echoes a similar blow last year to France’s biggest retail bank, Crédit Agricole, which in September announced a €250m charge related to an unauthorised trading position.
(Excerpt) Read more at ft.com ...
However, the Euro bankers bit off WAY more than they can easily absorb of the sub-prime crapola. Citi will take a big hit, and deservedly so, as will some other major US players. Paribas, ING, perhaps Barclay's too will take a similar hit, and some smaller Euro banks have already taken the hit, and they aren't quite as used to it -- there will be carnage in the Rues and the Strasses unlike anything they've seen to date.
My thoughts, speaking as a trader: Sell June EuroFX futures, and, if you're nervous, write April, then May, then (best case) June puts 3-4 handles below the mkt, 1-for-1 against the short sale, each 30 days succeeding. I cannot conceive of the circumstance where this trade will not end up profitably.
Say what you like about Bernancke's re-institution of the ''Greenspan put''. At least the Fed are acknowledging that there is a liquidity problem. ECB, and that clown Trichet, haven't even got close to admitting this yet.
http://online.wsj.com/article/SB120115814649013033.html?mod=googlenews_wsj
The Paris bank said it found a case of fraud, “exceptional” in its nature and scope, at its French markets division on the weekend of Jan. 19. A trader at the futures desk had taken unusually high trading positions, taking advantage of his knowledge of the group’s security systems, SocGen said.
SocGen said the board of directors rejected the resignation of Chief Executive Daniel Bouton.
SocGen shares were suspended from trading in Paris as the market opened, stock-market operator Euronext said.
Shares of SocGen closed at €79.08 Wednesday. With a market capitalization at around €38 billion, nearly half of its market value has been wiped out since the credit crisis began six months ago. SocGen is slated to report full-year figures Feb. 21.
This is the company that Soros was trading on inside information. He was convicted of insider trading in France.
Perceptive. The socialists bought most the capitalists bad debt. Who says we don't export?
yitbos
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