Pressure grows for a 'change of captain' at SocGen

The French finance minister, Christine Lagarde, joined politicians calling for the resignation of Société Gé*érale's chairman and chief executive, Daniel Bouton, yesterday as it emerged that one of the bank's directors had sold shares just before news of the rogue trading broke.

M. Bouton was criticised by Mme Lagarde, who said the board should question "whether the person in place is the best to steer his ship when she is pitching, or whether the captain should be changed".

The bank's board is due to meet today.

Mme Lagarde added in a statement to LCI television in France yesterday that Société Gé*érale was in "a crisis situation".

This comes a day after the French President, Nicolas Sarkozy, who was in London yesterday to meet the Prime Minister, Gordon Brown, said: "When there is an event of this nature, it cannot remain without consequences as far as responsibilities are concerned." The statement was widely interpreted in France as a call for M. Bouton's dismissal.

One source close to the French bank said: "It is impossible to deny that the pressure is building on the senior management."

M. Bouton, along with the group's head of investment banking, Jean-Pierce Mustier, offered his resignation to the board after the activities of the alleged rogue trader, Jerome Kerviel, were revealed last week. The board said they should remain in place to resolve the bank's troubles.

Questions have been mounting this week over how SocGen had failed to spot the huge trading positions taken by M. Kerviel last year, as it emerged that the derivatives exchange Eurex had alerted the bank to trading anomalies in November.

M. Bouton said on Monday that his offer to resign remained on the table.

The SocGen board is preparing to meet at its headquarters in La Défense later today. As part of the meeting, the board will review the initial findings of its internal audit launched in the wake of the trading losses.

Meanwhile, the SocGen non-executive director Robert Day and his family's trusts and charitable foundations were revealed to have sold €140.36m (£104.25m) worth of SocGen shares in the two weeks before the losses were announced. SocGen said: "All disclosures were made. No inside information was used in any way with respect to these December and January sales."

A French lawyer, Frederik-Karel Canoy, has launched a suit against the bank, claiming insider dealing, but also against Mr Day, who sold €45m worth of shares on 18 January. The bank said Mr Day had no knowledge of the losses until two days later.

Mr Day has denied any impropriety, and the bank added that he was unaware of the losses sparked by M. Kerviel or the sub-prime write-down worth €2.05bn before completing the trades.

The Financial Services Authority and the French regulator, the Autorité des Marchés Financiers, have been scrutinising whether any trades anticipated SocGen's unwinding of the positions built up by M.Kerviel last week.

M. Kerviel, 31, was released on Monday night after he was formally accused of breach of confidence, forgery and computer hacking. He escaped the more serious accusations of fraud and aggravated breach of confidence.

He had built up trading positions worth €50bn in futures positions across Europe. When the bank unwound the positions at the start of last week, the losses amounted to €4.9bn.

SocGen was reported to be surprised by claims that M.Kerviel had been engaging in trading activities without the bank's knowledge since 2005.

A source said: "The bank could find no record of it before 2007. If he was breaching his limits before then it didn't cause heavy losses and wasn't significantly big enough to catch the bank's attention."

The source poured cold water on the chance of a takeover, despite the bank's shares leaping around 10 per cent on speculation that it was a target. He said: "There is no way the politicians would allow a cross-border deal, and a domestic merger would create such a huge headache with various bits having to be sold off that it just isn't likely."

François Fillon, the French Prime Minister, said: "The government is determined that Société Générale remains a great French bank."

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