The Bank of France has announced it is to open an inquiry into an alleged fraud at France’s second largest bank, Societe Generale, which will cost the group 4.9 billion euros. According to Societe Generale, a rogue trader acting alone is responsible for the fraud and concealed his positions through “a scheme of elaborate fictitious transactions”. The bank says it had taken steps to reinforce its capital to face the scandal and the current financial markets crisis.
Societe Generale chief Daniel Bouton: “I think they can count on the amazing determination of all our personnel to make up for the consequences of this fraud, which is completely unusual.”
Societe Generale said it would write down an additional 2.05 billion euros in assets related to subprime exposure. Despite these losses, the bank estimated its full-year net profits for 2007 at around 600 to 800 million euros.