France's Noyer backs SocGen despite €5bn fraud

Christian Noyer, the governor of the Banque de France, said on Thursday that he was "not at all worried" about Societe Generale, the second biggest French bank, despite it falling victim to the biggest fraud in banking history.

In a hastily-arranged press conference on Thursday afternoon, following the revelation early in the day that a trader had lost the bank €4.8 billion ($7 billion), Noyer said there was no doubt that the bank was solid and that it "could surmount this challenge." Christine Lagarde, France's finance minister, reiterated the governor's comments.

The central bank said on Thursday morning that it had known about the fraud since the weekend. "The Banque de France was informed immediately once the fraud and its consequences were discovered," it said.

Societe Generale uncovered the fraud, the original scale of which was not revealed, on 19 January. It had tried to recoup some of the rogue trader's losses earlier this week by unwinding his positions. However, the turmoil in equity markets meant it was limited in doing so.

The bank said that the trader, which it is yet to name, had bought a huge amount of futures, betting on European equity market movements. The bank said it planned to raise €5.5 billion in a share issue to shore up its capital base.

To read the bank's press release, click here

To view the central bank's press release (available in French only), click here

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