Leeson part 2

[full back]

From BBC


Rogue trader to cost SocGen $7bn 

Despite the loss, the bank expect to report a net profit, made in 2007
French bank Societe Generale has announced losses of 6.9bn euros ($10.2bn, £5.2bn), blamed on a fraud by its trader and the credit crunch.
Societe Generale said it uncovered a fraud of 4.9bn euros by a Paris-based trader, who has been suspended.

It also announced new write downs of 2.05bn euros related to the sub-prime mortgage crisis in the US

The bank, one of France's largest, will need to seek 5.5bn euros in new capital to make good the losses.

'Secret trade'

"I am sorry but I have a hard time buying the fact that a trader was able to set up a 'secret trade' of 4.9 billion without anybody finding out," said Ion-Marc Valhi at Amas Bank.

The rogue trade took apparently took place last weekend, on 19 January.

 
The sheer scale of the loss is overpowering

Robert Peston,
BBC business editor


Read Robert's report in full
Frederic Hamm, fund manager at Agilis Gestion, believes that the fraud "impacts the reputation of the bank".

Chief executive Daniel Bouton offered his resignation but it was rejected by the board, the bank said.

Richard Fuld, the chairman of Lehman Brothers, told BBC News in Davos that "nothing stuns me, nothing really surprises me these days."

Shares in the bank were suspended on Thursday.



Jaysus, that is a serious amount of money in any mans book

[stephenite]

Surely to God you can't hide anywhere on this planet with billions that aren't yours, can you?

[stephenite]

A source quoted by the AFP news agency later named the trader as Jerome Kerviel. The source said Kerviel, who earned less than €100,000 a year, had been with Societe Generale since 2000.

He worked in the investment bank division, moving from the middle office which checked deals to the front office or trading desk in 2005.

[the Deel Rover]

Unreal that one employee could loose a bank 4.9 billion. Had they no controls or checks? You would think after what had happened to Nick Leeson that the banks would have taking measures to ensure that such a thing wouldn't occur again.

[TacadoirArdMhacha]

Frederic Hamm, fund manager at Agilis Gestion, believes that the fraud "impacts the reputation of the bank".

No flies on that boy.

Amazing that there are no checks and balances. Surely to God this man's boss should have had some input into what he was doing.

[nifan]

I believe he was in for up to $50 bn.

His 4 superiors where sacked pretty much instantly.

[the Deel Rover]

must be a fair sized bank if it can take a hit of 5 billion 

[nifan]

Its big, but it will hit it bad still. I hadnt heard of it getting too badly stung in the credit crunch (certainly not to citi/ bear stearns/ merril standards) though i stand to be corrected - it certainly wasnt highlighted as such, though it is substantially smaller