SocGen profit despite trader loss

Societe Generale made a profit in 2007 despite a trading scandal that cost the bank 4.9bn euros ($7bn; £3.7bn).
The French bank said it made a net profit of 947m euros for the year, although this was down 82% from 2006.

Last month, SocGen announced massive losses which it blamed on rogue deals carried out by Jerome Kerviel - a junior trader at the bank.

But an internal report has acknowledged that better systems might have prevented the fraudulent trades.

The bank made a loss of 3.35bn euros in the final three months because of "hidden market activities", it said.

Investigation

An internal investigation by an independent committee set up by the bank found that the bank's own systems were partly to blame for the biggest trading losses in banking history.

The results of the investigation made public on Wednesday also show that rogue trades were first made back in 2005.

The report said risk controls at the French bank "lacked depth".

It said staff had failed to make detailed checks and the bank lacked systems used by rivals that may have identified the rogue trades.

No accomplices

Despite some speculation to the contrary, the report said there was still no evidence to suggest that Mr Kerviel acted with the help of any accomplices.

The report did not draw any conclusions about the responsibility of Mr Kerviel's managers, as a criminal investigation by French judges is continuing.

Societe Generale's board has stood behind executive chairman Daniel Bouton, despite widespread calls for him to resign.

Mr Bouton has said Societe Generale plans to weather the crisis as an independent bank, despite reports of a potential bid from rival BNP Paribas.

"I am completely determined to continue with our strategy... even taking into account our very bad year in 2007 due to the financial crisis and this fraud," he told Reuters news agency.

To help plug the losses and pay for a 2bn euro write-down linked to the sub-prime crisis, SocGen began selling 5.5bn euros worth of shares to existing shareholders on Thursday to raise funds.

It also said it would cut its dividend.

In custody

Mr Kerviel, 31, is in custody while the case is being investigated.

He is accused of breach of trust, falsifying documents and breaching computer security.

A court ruled that he should be detained because of the "necessities of the investigation" and the risk that he could flee the country.

BBC NEWS