French press expresses shock, concern over SocGen fraud
French newspapers expressed shock over Societe Generale's 4.9 billion euro loss due to fraud, many expressing concern over its possible wider impact
PARIS, January 25, 2008 - French newspapers expressed shock over Societe
Generale's 4.9 billion euro (7.15 billion dollar) loss due to fraud, with many
also expressing concern over its possible wider impact on confidence in the
"Societe Generale: the shock which stupefied the banking world," screamed
the headline of the business daily Les Echos.
France's other business daily, La Tribune, berated Societe Generale and
other banks for failing to tighten up financial controls despite earlier
scandals and investing huge sums in computerised control systems.
"How could a bank of such calibre reputed for its experience on financial
markets end up in this mess? Why did it take so long to uncover the damage?"
the newspaper asked.
Societe Generale announced on Thursday that a rogue trader, identified by
bank sources as 31-year-old Jerome Kerviel, had caused the losses by taking
out "massive fraudulent directional positions in 2007 and 2008 beyond his
It insisted the trader had acted alone and said he was able to hide the
losses due to experience of having worked in the section which monitors
"In the case of Societe Generale, the conclusion one reaches after having
carefully considered the matter, that between the bank and the employee, the
more crazy of the two is not the one that you first thought," said La Tribune.
For Le Figaro the crux of the matter was "that which was presented as fraud
in reality exposes risk control systems as dangerously weak."
Furthermore, the incident "carries a bad germ much more harmful, in
reinforcing the climate of weakness which, since the beginning of the subprime
crisis, has ruined the reputation of the financial world."
With many newspapers carrying comments of bankers and experts incredulous
that one trader alone could amass such losses and hide them for so long, Les
Echos warned doubts about the incident could prove damaging.
"... if the numerous questions which remain unanswered are not rapidly
cleared up, it could damage the credibility of all the banking system."
Le Figaro said "it is already evident that Societe Generale cannot escape
this crisis unscathed. It may even lose its independence."
Destabilised and having lost 40 percent of its value over the past six
months, "the punishment most probable is likely to be losing its
independence," Les Echos concurred.
"If its old competitor BNP Paribas doesn't seize the occasion, it is a
strong bet that another big European bank, like Italy's UniCredit ... will