SocGen faces fresh scandal as it probes 'anomalies' in client account
SOCIETE Generale, the French bank that lost €4.9bn in a rogue trading scandal in 2008, yesterday faced fresh embarrassment when it announced an internal investigation into "anomalies" in a client account in Singapore.
The bank said that other clients had been notified that they could be affected, but it refused to detail the scale of the losses incurred.
A spokesman for the bank said that it had alerted financial authorities in Singapore and added: "Societe Generale (SocGen) is doing everything to resolve this matter in the interest of its clients."
The client in whose account anomalies were detected -- in February -- was advised by a wealth management specialist, the bank said.
Societe Generale's private banking unit manages assets that in 2009 were worth €75bn and generated revenue of €826m.
Jerome Kerviel, the rogue trader dismissed by the bank two years ago, faces trial in France this summer on charges of breach of trust, falsifying and using fake documents and tampering with computer information.
Investors have launched a class action in New York, accusing Societe Generale of failing to prevent Mr Kerviel from taking unauthorised positions worth €50bn.
The bank is still recovering from the scandal he created, which led to the resignation of many executives, including Daniel Bouton, its former chief executive and chairman.
Prosecutors have said that Mr Kerviel, who made bets on European stock exchange indices, was able to conceal his scam for so long because, having worked in Societe Generale's middle office, which supports traders, he knew how to cover his tracks by logging on using colleagues' names and settling trades with false documents.
The scale of Mr Kerviel's fraud -- the unauthorised positions he held totalled more than the bank's value -- has intensified criticism of "casino" banking and, in particular, proprietary trading, in which traders bet with the bank's money.
Liquidating his trades in Germany's DAX Index and the pan-European Euro Stoxx 50 led to a loss five times that of Nick Leeson's £827m shortfall that brought down Barings in 1995.
Societe Generale shook markets again in January when it warned that it would have to take another €1.5bn writedown on its toxic collateralised debt obligations and credit default swaps.