Finance news

France stepped up efforts to restore confidence in the banking system as Societe Generale faced tough questions on Friday over why it failed to prevent the biggest financial dealing scandal in history.

Commenting for the first time, while on a trip to India, on the bank’s $7 billion in rogue trading losses, President Nicolas Sarkozy called it a “large scale internal fraud” said it did not call into question the solidity of France’s financial system.

Echoing reassurances from both government and central bank when the scandal broke on Thursday, Sarkozy said the losses “do not affect the solidity and reliability of the French system”.

Bank of France Governor Christian Noyer said in a radio interview Societe Generale’s accounts were now clean after the bank moved to unwind positions built up by a lone trader under the noses of his supervisors.

Noyer dismissed speculation that some of the losses pinned on the trader were due to the ongoing global credit crisis, but hinted other French banks could announce writedowns linked to credit market losses when they report earnings.

“We know exactly what the exposures are http://pay-day-home.com. The provisions have been announced or will be announced in the coming days, where necessary,” Noyer told RTL radio.

In full page adverts in France’s leading newspapers, Chairman Daniel Bouton apologized to SocGen shareholders as newspapers and analysts questioned whether a stay of execution granted him by the bank’s board would last long.

Bouton offered to quit but was asked to stay on. 

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