Behind Societe Generale’s losses
TEXT OF STORY
Doug Krizner: Most Asian stock markets took their cue from Wall Street. Financial shares in particular are among the big winners overnight. Japan’s Nikkei added 2 percent. In Europe this morning, the major markets are higher.
That, in spite of news about a huge trading loss at one Europe’s oldest banks.
Societe Generale is blaming the fiasco on a rogue trader, as Stephen Beard reports.
Stephen Beard: Societe Generale says that an “imprudent employee” dealing in European stock futures has lost more than $7 billion. The unnamed trader was based in Paris.
The bank says he had a deep knowledge of risk-control procedures, and was therefore able to evade them. Analysts see this as just the latest chapter in the saga of shady banking practices.
Mark Durling of brokers Brewin Dolphin says there’s been a widespread culture of greed in the industry — not just one “imprudent employee” in Paris.
Mark Durling: I think there’s a minimum of 500 of them currently either employed or enjoying, sunning themselves in the Caribbean, I’d imagine, on the bonuses they’ve had from previous years, and have basically brought mega institutions to their knees.
Societe Generale lost an additional $1.5 billion on U.S. subprime mortgages. The bank is hoping to plug the hole in its accounts with an $8 billion share issue.
In London, this is Stephen Beard for Marketplace.
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