Chairman's Future in BalanceBy Reuters - | Posted 2008-01-29 Print
France warned foreign banks not to try to grab control of Societe Generale as it reels from losses blamed on a rogue trader, but shares in the bank spiked higher on takeover speculation.
CHAIRMAN'S FUTURE IN BALANCE
The bank's board is expected to meet on Wednesday, facing embarrassment over its failure to make a fraud accusation stick against Kerviel and with doubts cast over the bank's version of events.
Bouton, who last week offered to leave but was asked to stay on by the board, said on Monday his resignation remained on the table, suggesting he is aware his position may be unsustainable.
Bouton's departure would raise a problem of succession at the bank. His heir apparent, Jean-Pierre Mustier, heads the investment division that employed Kerviel and has also been damaged by the crisis.
SocGen's managers suffered more embarrassment when a French prosecutor revealed on Monday that Eurex, a derivatives exchange owned by Deutsche Boerse, had questioned Kerviel's trading positions in November, but that Kerviel had been able to sidestep questions from his employer.
The government has expressed annoyance that it was not tipped off sooner that a crisis was brewing and piled pressure onto its bosses.
"Societe Generale is in a crisis situation," Economy Minister Christine Lagarde told LCI television on Tuesday.
"In a difficult moment, the board members are there to decide if the person in charge is the best placed to run the ship when it is pitching a bit, or whether they should change the captain," Lagarde said.
President Nicolas Sarkozy said on Monday SocGen managers would have to accept their share of responsibility.
SocGen, which in recent years has become a global leader in financial derivatives trading, has said it was in the dark about Kerviel's alleged illicit trades until it spotted a discrepancy on January 18, triggering an internal investigation.
Kerviel ran up a huge position of 50 billion euros on futures tied to European share indices. Instead of protecting the bank's investment as he had told supervisors, he left it exposed to the risk that shares would fall.
(By Andrew Hurst and Tim Hepher; Additional reporting by Sudip Kar-Gupta, Astrid Wendlandt, Sophie Louet, Thierry Leveque, Crispian Balmer, Francois Murphy, Yann Le Guernigou, Blaise Robinson, Reuters bureaus; Editing by Paul Bolding and David Holmes)
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