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French Government to Protect Bank After $7 Billion Loss
by
findingDulcinea Staff
The French premier pledges to protect Societe Generale from hostile takeover bids after the bank lost $7 billion, allegedly through the activities of a rogue trader.
30-Second Summary
In a Jan. 29 statement, French Prime Minister Francois Fillon said, "The government will not let Societe Generale become the object of hostile raids from other banking establishments."
He added that the “government is very attentive to any risk of destabilization of Societe Generale.”
Nonetheless, the bank’s shares have gone up almost 9 percent on takeover speculations, Agence France-Presse reported.
Fillon’s comments come after top French politicians, including President Nicolas Sarkozy, began pressuring SocGen to allow Chief Executive Daniel Bouton to step down. However, the bank’s board rejected Bouton’s previous offer to resign.
John Holmes, an analyst with the investment bank Keefe, Bruyette & Woods, agrees with the board's actions. "The last thing that Societe Generale needs right now, as well as for this to happen, is to lose their chairman," Holmes told Forbes magazine.
SocGen has blamed 31-year-old trader Jerome Kerviel for the $7 billion loss, accusing him of placing unauthorized bets on the future prices of European stock indices.
According to The Wall Street Journal, Kerviel's actions may have gone undetected because he held such a low position in the company hierarchy "that some didn't consider him a trader at all."
He added that the “government is very attentive to any risk of destabilization of Societe Generale.”
Nonetheless, the bank’s shares have gone up almost 9 percent on takeover speculations, Agence France-Presse reported.
Fillon’s comments come after top French politicians, including President Nicolas Sarkozy, began pressuring SocGen to allow Chief Executive Daniel Bouton to step down. However, the bank’s board rejected Bouton’s previous offer to resign.
John Holmes, an analyst with the investment bank Keefe, Bruyette & Woods, agrees with the board's actions. "The last thing that Societe Generale needs right now, as well as for this to happen, is to lose their chairman," Holmes told Forbes magazine.
SocGen has blamed 31-year-old trader Jerome Kerviel for the $7 billion loss, accusing him of placing unauthorized bets on the future prices of European stock indices.
According to The Wall Street Journal, Kerviel's actions may have gone undetected because he held such a low position in the company hierarchy "that some didn't consider him a trader at all."
Headline: 'France Warns Off Hostile Bidders for Crisis Bank Societe Generale'
French Prime Minister Francois Fillon said on Jan. 29 that his government will protect Societe Generale from takeover bids. "The government will not let Societe Generale become the object of hostile raids from other banking establishments," Fillon said. The premier’s comments come after other senior French politicians put pressure on SocGen to allow its chief executive to resign. The bank’s shares went up 9 percent on speculation of a possible takeover.
Source: Agence France-Presse
Background: Rogue trader costs Societe Generale $7 billion
A French prosecutor has said that SocGen received warnings about Jerome Kerviel from stock market officials last year. The alleged rogue trader is being investigated for breaching trust and computer security as well as for forging documents. SocGen says Kerviel made an unauthorized bet worth $50 billion on the future prices of big European indices, which is more than the entire bank’s value.
Source: The BBC
Societe General, France’s second largest bank, has discovered that a single futures trader committed a “massive” fraud. The trader concealed the money using “sophisticated and varied techniques.”
Source: findingDulcinea
Opinion & Analysis: Kerviel, Bouton in the spotlight
"The last thing that Societe Generale needs right now, as well as for this to happen, is to lose their chairman," John Holmes, an analyst with investment bank Keefe, Bruyette & Woods, told Forbes. Top French politicians, including President Nicolas Sarkozy, have called on the bank’s top brass to take responsibility for the Kerviel losses. Chief Executive Daniel Bouton has taken the most heat, with Sarkozy calling for his resignation.
Source: Forbes
According to The Wall Street Journal, Jerome Kerviel was so low down in the company hierarchy that many did not even consider him a trader. In fact, his lowly position may have allowed his actions to go undetected. The Journal provides an overview of Kerviel’s career and offers an explanation of how he may have pulled off “the world’s biggest-ever trading loss."
Source: The Wall Street Journal
Reference: Hostile takeover defined
An unfriendly, or hostile, takeover is the acquisition of a firm despite resistance by its management or board of directors.
Source: The Free Dictionary
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