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theoretical
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作者：theoretical 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
LONDON (MarketWatch) -- Societe Generale, France's second-largest bank, stunned financial markets Thursday when it announced a single trader, reportedly named Jerome Kerviel, had cost it 4.9 billion euros ($7.1 billion) in one of the largest ever frauds by a rogue employee.
The announcement came on top of a further 2.05 billion euros in write-downs expected in the fourth quarter and led to plans for the bank to raise around 5.5 billion euros in a capital increase over next few weeks.
The trader was widely reported to be Kerviel, a relatively junior 31 year-old on the futures desk in Paris, whose role was to make "plain vanilla" hedges on European stock-market indexes.
SocGen (FR:013080: news, chart, profile) didn't confirm Kerviel's identity, but said in a statement that the trader used his knowledge of the bank's control procedures "to conceal these positions through a scheme of elaborate fictitious transactions."
The fraud dwarfs even that of infamous rogue trader Nick Leeson who racked up losses of around $1.4 billion at Barings Bank in 1995.
Leeson's actions led to the collapse of Barings. Convicted of fraud, he was sentenced to a jail term of six-and-a-half years. It's unclear whether Kerviel will face criminal charges, but SocGen said it has begun dismissal proceedings against him. His direct supervisors will also leave the group.
In addition, SocGen said its board of directors rejected CEO Daniel Bouton's offer to resign as chief executive, though Bouton and will give up his salary until the end of June.
The company said the fraudulent trades were made in 2007 and 2008, adding that it has no residual exposure to the trader's positions, which were discovered and investigated on Jan. 19.
The 4.9 billion-euro cost of the fraud is before tax and includes losses from SocGen's decision to close the positions as quickly as possible.
The episode raises serious questions about SocGen's risk control and balance-sheet transparency, said Jean Pierre Lambert, analyst at Keefe Bruyette & Woods.
What's more, it's particularly embarrassing for the bank as the fraud occurred in SocGen's Paris home base, he said.
Pierre Flabbee, analyst at Landsbanki Kepler in Paris, noted that the fraud took place in equity derivatives -- the firm's most profitable division in which it had a leading global position.
It's wiped out two years' worth of profit from that division, and markets will now have to factor higher volatility into the group's investment banking earnings, he added.
In a case of unfortunate timing, the fraud was also revealed shortly after SocGen scooped Risk Magazine's coveted "Equity Derivatives House of the Year" award.
Shares of SocGen dropped 7.2% in afternoon trading in Paris, in contrast to a rally enjoyed across the European banking sector.
Hidden trades
Kerviel reportedly joined Societe Generale in 2000 and spent several years working in the back office before moving to trading a couple of years ago. He reportedly earned less than 100,000 euros a year -- a relatively small sum for a trader at a major investment bank.
Kerviel used his experience of the bank's risk and control systems to hide the huge positions he created, Bouton told investors and the media during a heated press conference.
Also Thursday, French rival BNP Paribas (FR:013110: news, chart, profile) , was quick to issue a statement in which it said that it hadn't found any major issues with its financial results, which will be released next week.
Neither any loss nor any other matter has been revealed, whose importance would justify a market warning," BNP said.
Another competitor, Credit Agricole (FR:004507: news, chart, profile) , recently revealed losses from unauthorized trades, although on a much smaller scale. The bank said in September that it would cost around 250 million euros to unwind trades in credit-market indexes made at the New York offices of its Calyon unit.
Shares of BNP Paribas advanced 6.6% and Credit Agricole gained 6.3% in Paris, while Barclays (UK:BARC: news, chart, profile) (BCS:Barclays PLC
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A question of when
According to Bouton, big bets on the direction of European indexes were concealed by fictitious trades in the opposite direction. That gave the impression to the bank's compliance and back-office staff that the risks were balanced out, he said.
Indeed, the losses were largely only realized because the bank unwound the positions during a slump in global equity markets over the last few days. If markets had gone up at the start of the week, the positions could even have turned into gains, Bouton added.
But the CEO dismissed assertions that SocGen should have disclosed the trades before closing out the positions. If the bank had disclosed massive open positions, other banks could have moved the market against it, he claimed.
Landsbanki Kepler's Flabbee agreed that once the fraud was discovered, SocGen was right to close the positions. Had it had been disclosed straight away, "it would have been a complete disaster," he said.
SocGen executives told reporters that the trader's actions were "inexplicable" and that he didn't benefit directly from the fraud. Investigations are continuing to see if he made any indirect profit or was working with anyone outside the bank.
Analysts at Standard & Poor's put the bank under review for possible downgrade following the announcement. "The loss resulting from the fraud appears to be an isolated event triggered by exceptional circumstances," said S&P analyst Elisabeth Grandin.
"Nevertheless the magnitude of the loss is not consistent with our expectations of the bank's exposure to extreme events factored into the current rating," she added.
Further write-downs
Regarding its additional write-downs, SocGen said they consist of 1.1 billion euros related to U.S. residential mortgage risk and 550 million euros linked to its exposure to U.S. bond insurers. There's also a further 400 million euros of unallocated additional provisions.
The write-downs and fraud will leave SocGen with a 2007 profit of just 600 million euros to 800 million euros, while the company's corporate and investment banking arm will post a net loss of 2.3 billion euros for the year.
Analysts polled by Thomson Financial had expected the bank to earn 5.23 billion euros this year, on average.
Aiming to strengthen its capital position, the bank will launch a capital increase with preferential subscription rights of 5.5 billion euros, fully underwritten by J.P. Morgan and Morgan Stanley.
作者：theoretical 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 恒生尾盘一脑门子掉１４００点就是因为这主儿。 -- theoretical - (7082 Byte) 2008-1-25 周五, 08:19 (1304 reads)
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