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03 December 2023

Societe Generale seeks new capital after uncovering fraud

By Agencies




French bank Societe Generale said Thursday that it has uncovered a $7.14 billion (Dh26.1 billion) fraud which, combined with a write-down from its sub-prime exposure, will force it to seek $8.02 billion (Dh29.27 billion) in new capital.

France’s second-largest bank by market value after BNP Paribas SA said it detected a case of “exceptional fraud” at its French markets division on the weekend of January 19. A trader at the futures desk had taken unusually high trading positions, taking advantage of his knowledge of the group’s security systems, SocGen said.

Sub-prime writedowns linked to the crisis in financial markets amounted to $2.99 billion (Dh10.9 billion), the company said.

As a result, the bank is planning a capital hike in the “following weeks”.

The write-down and losses related to the trading incident will lead the company to post a net profit of $874 million (Dh3.2 billion) to $1.16 billion (Dh4.23 billion) for all of 2007, the Paris-based bank said.

Chief Executive Daniel Bouton (pictured above) offered his resignation but it was rejected by the board, the bank said.

Speculation the bank would announce more subprime-related losses has hit shares in past weeks.

Trading in Societe Generale shares was suspended on Thursday, a spokeswoman for Paris market operator Euronext told Dow Jones Newswires.

Shares of SocGen closed down 4.1 per cent at $115.25 (Dh420.7) on Wednesday. In the past six months it has lost nearly half of its market value.

Full-year results will be announced February 21. (AP)