It didn't take long for the speculation to begin. Just hours after Société Gé*érale revealed it had been victimised by a rogue trader who lost the bank an astonishing €4.9bn (£3.7bn) on fraudulent trades, market watchers began speculating on who might swoop on the stricken bank.
Indeed, despite the bad news, which included further writedowns related to the sub-prime mortgage meltdown in America, the bank's shares fell just 4.1 per cent yesterday after they were unfrozen by the market regulator. Investors seemed to be betting that its weak position could lead to it being taken over.
Front and centre, of course, were sovereign wealth funds (SWFs). Having already ridden to the rescue of Citigroup, UBS, Merrill Lynch, Morgan Stanley and Bear Stearns, and with many other major banks nursing wounds from the sub-prime crisis, SWFs represent the most readily available source of cash. With an estimated $2.5trn (£1.25trn) between them, any number of them could be tempted to take up the €5.5bn emergency share sale, equal to about 18 per cent of total shareholder equity, that the bank announced yesterday. SocGen must raise the cash to remain within capital adequacy thresholds.
Several banks were also in the frame yesterday, with BNP Paribas top of the list. Back in 1999, SocGen tried to merge with Paribas but was beaten to the punch by BNP, sealing the deal that created BNP Paribas. Barclays, after failing to buy ABN Amro of the Netherlands, would be among potential suitors if it thought it could be the dominant partner in a merger with SocGen.
Meanwhile, the Spanish giants Santander Central Hispano and BBVA, who have so far remained relatively unscathed by the sub-prime crisis, were also seen as possible buyers. But the BBVA boss Francisco Gonzalez told a news conference for the bank's annual results yesterday: "We would never make an opportunistic move to take advantage of a situation like this."
If SocGen does seek a SWF investor, it would risk the wrath of the French president Nicolas Sarkozy, who has pledged to protect domestic companies against "extremely aggressive" SWF investors. Yet any investors will have to take a view on the extent of the damage at the bank. SocGen admitted it would have to write down an additional €2.05bn related to the credit crisis.
Analysts were also unsettled by the ability of one trader to carry out fraud on such a level, leading to fresh questions about the bank's management. Jean Pierre Lambert, an analyst at Keefe, Bruyette & Woods, said in a research note: "We believe today's news raises serious questions not only about risk control, but also balance sheet transparency and disclosure at SocGen, where there remain serious question marks."