Societe Generale loses $7bn in massive fraud

by Richard Kilner

Story link: Societe Generale loses $7bn in massive fraud

Daniel Bouton, the chairman of French bank Societe Generale, has said that the firm can recover from the shock news that it has suffered losses of $7bn due to internal trading fraud.

The declaration was made in correspondance to the 22.5 million customers of the bank.

The fraud case is one of the largest in history, and was organised by a single futures trader who fashioned a series of false transactions.

Societe Generale was already exposed to the subprime mortgage crisis, and the latest bad news prompted the chief executive to offer his resignation, which was not accepted by the board.

The bank is now seeking to generate $8bn in new capital to make up for the losses.

Over the last six months the bank’s share price has halved in value, and trading in them has been suspended.

The fraudster has confessed his crime, and was in the process of being dismissed, the bank has said.

Writedowns related to the subprime mortgage crisis had already cost the bank $3bn.