French Bank Suffers Big Trading Loss - Download Free Phim, Nhac, Phan Mem, Karaoke

conmeo · #1 (**permalink**) 10-23-2008, 03:06 AM

PARIS — A large French mutual bank, Groupe Caisse d’Épargne, said Friday that it had lost 600 million euros, or $807 million, as a result of unauthorized derivatives trading by a team on the bank’s own account.

The lender, which is in merger talks with a French rival, said in a statement that the loss was the result of “extreme market volatility” last week, and that the position had been closed.

The losses resulted from bad bets on derivatives linked to the direction of the CAC-40, the French equivalent of the Dow Jones industrial average, according to French officials.

A spokeswoman for the bank sought to distinguish these losses from the multibillion-dollar loss inflicted on Société Générale by Jérôme Kerviel, the rogue trader who made headlines early this year. “The traders took more risk in terms of the volume and the amount that was authorized,” she said.

Speculation of a big derivatives loss at a large bank rattled the stock exchanges in Paris last week, adding to downward pressure on banks’ shares and forcing rival lenders Société Générale and Dexia to issue denials.

The loss “does not affect the financial solidity of the group and will have no consequences on clients,” the bank said.

A spokeswoman for the bank said that a team of “around six traders” from the proprietary desk was responsible for the trades, and they no longer worked for the bank. She said she did not know whether they would face legal charges.

Groupe Caisse d’Épargne announced last week that it was in merger talks with Groupe Banque Populaire, through a fusion of their central operating units, Banque Fédérale des Banques Populaires and Caisse Nationale des Caisses d’Épargne.

The two banks, which are unlisted, jointly own nearly 70 percent of Natixis, which has suffered from exposure to subprime mortgage securities and other derivatives. They formed Natixis in 2006 by combining their investment banking and asset management operations.

The bank’s spokeswoman said the illicit trading “will not affect our merger discussions with Banque Populaire, which are continuing at a very fast pace.”

With the credit crisis in full swing, the French authorities are eager to see consolidation in the financial sector, analysts said.

The two banks said last week that a merger would create a banking group with revenue of 17.5 billion euros, or $24 billion, and deposits of 480 billion euros. The spokeswoman also said the derivatives involved were based on equity indexes. The positions were discovered this week by the bank’s internal auditors, she said, adding that the financial authorities — the Bank of France, the finance ministry and the financial market authority — were informed as soon as the incident was uncovered.

Christine Lagarde, the French finance minister, said she was “particularly frustrated and discouraged by the announcement of this loss of 600 million euros that is not arriving at the best moment.”

Ms. Lagarde was to attend on Friday the first board meeting of a special bank refinancing company that has a maximum of 320 billion euros at its disposal to refinance bank loans.

The fund is France’s contribution to a Europe-wide plan to provide liquidity to banks and restore confidence after interbank funding dried up because of mutual distrust and the spreading credit crisis.

In another sign of market fragility Friday, shares in the Dutch financial services giant ING plunged 15.2 percent, to 8.6 euros, in Amsterdam, on rumors it might need to raise capital.

The Dutch Finance Ministry said Friday that no company had made use of the Netherlands’ 20-billion-euro fund.

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