Daniel Bouton, the boss of scandal hit Societe Generale has survived – for the moment. The bank’s directors have met and resisted political pressure to dump the chairman and chief executive. Their thinking seems to be the need to keep Bouton and so avoid further upheaval in the face of a potential takeover bid by rival BNP Paribas.
Rogue trader Jerome Kerviel’s actions have weakened Societe Generale and made it more vulnerable. Kerviel’s former colleagues are opposed to a takeover, they fear that jobs could be cut as a result.
The timing of the almost five billion euros of losses from the unauthorised trades could not have been worse coming on top of Societe Generale’s two billion euros in subprime writeoffs.
BNP failed in an attempt to buy Societe Generale in 1999 and reportedly has not ruled out a new bid. Analyst Nathalie Pelras said the bank might be split: “Two names, BNP Paribas and Credit Agricole, are the most probable bidders on this stock. Two possibilities, the first that they keep all the activities, the second that there is a division, a split of the company, in one side, the retail banking and on the other side, the investment banking.”
In another development, Societe Generale has decided to set up a special committee of independent directors to look into the rogue trading scandal and ensure that the causes and impact of the losses are fully identified.