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FSA warns banks after SocGen loss

The FSA has warned UK banks to check their risk management and controls after claims that a trader at Societe Generale lost the bank £3.7bn.

The trader, Jerome Kerviel, has been questioned by police and could face charges.

He worked on the French bank’s European equities derivatives desk and bet billions of euros on which direction stockmarkets would move without the knowledge of his superiors.

The bank has been forced into an emergency £4.1bn cash call on shareholders while announcing a loss of £1.5bn following the US sub-prime mortgage crisis. Trading in the bank’s shares has been suspended after the price nearly halving in the past six months.

SocGen chief executive Daniel Bouton offered his resignation after the loss was uncovered but the board asked him to stay.

The bank says it still expects to make a profit of up to £600m for 2007 and its full-year results are due on February 21.

It is thought French banks Credit Agricole and BNP Paribas could make a move for some or all of SG, with Santander and Italian bank UniCredito also thought to be considering an offer.


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