SocGen posts €3.3 billion fourth-quarter loss

by Gill Montia

Story link: SocGen posts €3.3 billion fourth-quarter loss

French bank, Société Générale (SocGen), posted a record net loss of €3.3 billion in the fourth-quarter of 2007.

The result comes in the wake of a scandal involving rogue trader, Jérôme Kerviel, and takes net profit down to €947 million for last year, compared with €5.2 billion in 2006.

During 2007, SocGen’s corporate and investment banking business wrote down €2.6 billion on its investments in US sub-prime mortgage-related assets. The amount was in line with an earlier estimate.

The panel investigating the €4.9 billion trading loss incurred by Mr Kerviel has reported that between June 2006 and the beginning of 2008, the bank missed 75 warning signs that should have alerted managers to unauthorised actions.

While risk control procedures were followed correctly, it appears that the bank’s compliance officers carried out only routine checks and took no follow-up action on transactions that had been cancelled or modified.

The panel has found no evidence to contradict Mr Kerviel’s claim that he acted alone, stating: “there is no evidence of embezzlement or internal or external complicity.”

Mr Kerviel is currently in custody in Paris and investigations by the French police over computer hacking, falsifying documents and breach of trust continue.