Societe Generale board backs CEO
Daniel Bouton retains post at French bank amid huge losses blamed on rogue trader.
Kerviel was placed under investigation for breach of trust and other misdeeds on Monday, but judges threw out a stronger accusation of attempted fraud.
He said in transcripts of interviews with police that his activities could not have gone undetected by Societe Generale.
A lawyer representing the bank questioned Kerviel’s account and his credibility and insisted the trader had acted alone.
Under heavy political pressure to sack Bouton, the 15-strong board has now twice backed the CEO, who offered to resign as soon as the bank uncovered risky positions, which it disclosed last Thursday.
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Politicians, including Nicolas Sarkozy, the French president, have called for sweeping changes in the wake of scandal.
Support for Bouton ebbed back and forth on Tuesday when France’s finance minister first appeared to call for him to quit, then changed her mind.
Bouton, author of a blueprint on how to run a French company, has pledged that Societe Generale will bounce back from its humiliation over illicit bets worth $70bn placed by Kerviel.
Societe Generale shares rose 10.4 per cent on Tuesday, spurred on by rumours that France’s biggest listed bank, BNP Paribas, might launch a bid for the weakened bank.
On Wednesday, the shares edged up another 0.9 per cent to 79.14 euros.
‘Difficult period’
Patrick Ollier, chairman of the French national assembly’s finance commission, said: “He [Bouton] must go, I think, but not during this difficult period which will last several weeks.”
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| Kerviel said to police that his activities could not have gone undetected by SocGen [AFP] |
However, Philippe Pruvost, an employee representing staff interests on Societe Generale’s board, said he would back Bouton to remain in charge.
“When the boat is rocking, you don’t throw the captain overboard,” he said.
What employees feared most was a takeover bid and a “loss of the bank’s identity”, he said.
Bouton repelled one BNP bid in 1999.
BNP declined to comment on the bid speculation but brought forward a partial announcement of 2007 results, showing a lower but still solid 1bn euro profit for the fourth quarter.
Redundancy fears
One scenario widely floated by bank analysts is a break-up of Societe Generale with its retail branches going to BNP and its investment banking arm to French bank Credit Agricole.
That could trigger a spat with unions who helped Societe Generale’s management repel BNP’s 1999 takeover approach. As a result, fears have risen that some of Societe Generale’s 120,000 staff could lose their jobs.
The government has warned off foreign or hostile predators, meaning any tie-up must be all-French and approved by both banks.
Societe Generale has been forced to launch a capital increase to raise 5.5 bn euros to cover the losses, as well as a 2.1 bn euro writedown resulting from the subprime crisis.