The Libor inquiry isn't over

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By Lionel Laurent and Matthias Blamont

PARIS, Oct 26 (Reuters) - Societe Generale, France's second-biggest listed bank, has received a new request for information from U.S. authorities investigating the Libor rate-fixing scandal, a banking source told Reuters on Friday.

SocGen has already said publicly it is cooperating with probes into whether banks manipulated the Libor rate - the benchmark for $300 trillion of contracts and loans across the world - and is conducting its own internal inquiry.

"The request is not a subpoena to appear in a court but a request for more information from U.S. regulators," the source said.

SocGen declined to comment. Chief Executive Frederic Oudea reiterated last month that the bank had not received any allegation or charge linked to the probe.

Second time unlucky for the most indebted trader in the world

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By Lionel Laurent and Thierry Lévêque

PARIS, Oct 24 (Reuters) - Former Societe Generale trader Jerome Kerviel lost his appeal on Wednesday against a three-year prison sentence for his role in France's biggest rogue-trading scandal.

A Paris appeals court ruled that the 35-year-old ex-trader, who had fought to overturn a 2010 conviction for taking huge, risky bets that cost SocGen 4.9 billion euros ($6.35 billion), was responsible

It said he must also repay the bank the billions lost, potentially a life-time claim on part of his earnings.

"Jerome Kerviel was the sole creator, inventor and user of a fraudulent system that caused these damages to Societe Generale," the court said in its ruling.

A nervous-looking Kerviel, who chewed his nails as he heard the verdict, was not forced to go to jail immediately. A separate judge will decide the precise terms of his sentence and how many hours he spends behind bars every day - a process that lawyers say could take weeks.

In all, Kerviel's sentence is for five years in jail, two of which are suspended.

The ruling is a victory for SocGen, which has spent years trying to shake off the scandal after it hit headlines around the world at the dawn of the 2008 financial crisis.

It also comes as the financial industry battles lawsuits over crisis-era behaviour and public perception it is too risky.

Kerviel's lawyer, David Koubbi, said he was examining the possibility of calling on France's highest court of appeal, the Cour de Cassation, to rule on the legality of the rulings.

"We had given ourselves the goal of defending Mr. Kerviel against an absolutely appalling injustice. I can tell you that we've failed," Koubbi told journalists outside the court.

Kerviel's chances of walking free aren't looking good

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By Lionel Laurent

PARIS, Oct 22 (Reuters) - Jerome Kerviel, the man behind France's biggest rogue-trading scandal, finds out this week whether he is heading to prison or walking free after his last court appeal in a four-year battle against former employer Societe Generale.

Former trader Kerviel submitted a final attempt in June to be acquitted and avoid a three-year jail sentence handed down in 2010 for his role in taking huge, risky bets that cost SocGen 4.9 billion euros ($6.4 billion) to unwind and slammed the French bank's reputation.

Wednesday's verdict, barring unexpected legal challenges, will be the final say on a case during which Kerviel, who has kept an impassive front throughout, built a cult following.

While Kerviel has never denied masking the 50 billion euro positions that made headlines around the world as the financial crisis unfolded in early 2008, he has always said his bosses knew what he was doing - which SocGen denies.

The outcome will be closely watched by a financial industry facing other lawsuits over crisis-era behaviour. A similar trial is unfolding in London over the role of trader Kweku Adoboli in a $2.3 billion loss at UBS.

"These appear to be spectacular cases by virtue of the size of the risks taken by these traders and the danger that they put their banks in," said Emmanuel Moyne, a litigation lawyer at Linklaters in Paris.

"But if you compare it to cases where the amounts involved were much smaller, it is no different to people who simply cheated an internal controls system."

Taxman cuts French banks' Greek bill by 2 bln eur

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By Lionel Laurent

PARIS, Oct 19 (Reuters) - French banks Credit Agricole and Societe Generale have collectively spent billions of euros sealing their exit from debt-ravaged Greece, injecting capital and sweetening terms for buyers to take businesses off their hands.
Thanks to the French taxman, however, they have managed to recoup 2 billion euros ($2.6 billion) from the total bill.
French tax law - which has since been changed - allowed the banks to deduct taxes on capital injected into their ailing Greek units, analysts said, cushioning their bottom line from the maximum amount of pain after pre-crisis investments in Greece turned sour with the euro zone's debt drama.
Credit Agricole's chief financial officer told analysts on a conference call the bank was able to deduct 1.6 billion euros from the 3.2 billion equity loss of selling its Emporiki unit to Alpha Bank, leaving a net loss of 2 billion euros once other costs were added.
SocGen did not disclose the amount deducted but two analysts reached by Reuters estimated the savings would have been around 300 million euros.
A SocGen spokeswoman said taxes were "among several reasons" that explained the gap between the bank's outlay of 444 million euros to sell Geniki to Piraeus Bank and its net-loss impact of 100 million. She declined any further comment.
"It was a good time to get out of Greece," one of the analysts said.

Paintbrushes at dawn: Art-world power dealers go toe-to-toe in Paris

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By Lionel Laurent

PARIS | Mon Oct 15, 2012 6:16pm EDT

(Reuters) - A white horse quietly munches hay in the corner of a new warehouse-sized art gallery in the Paris suburb of Pantin, an oblivious player in a giant exhibit featuring mud-and-rust-colored paintings, creepy embryo sculptures and a black-and-white projection of an artist reciting Goethe.

Welcome to the world of the mega-gallery, a larger-than-life testament to the booming power of the $1.2 billion contemporary art market and the latest battleground for flamboyant art-dealer players and their increasingly valuable big-name artists.

While the French capital tends to be seen as a sleepy second fiddle to London in terms of market share, today it is staging the latest round of the fight for collector cash as two rival mega-spaces open just days apart with works by the same artist.

In one corner, Austrian-born dealer Thaddaeus Ropac, whose new gallery in Pantin is a 2,000 square-meter space housing a horse, its hay bale and a series of gloomy works by cerebral German artist Anselm Kiefer including doll-sized dresses skewered by branches.

In the other, world-famous American dealer Larry Gagosian - who earned a name-check from rapper Jay-Z on the "Watch The Throne" album - has opened a huge, new gallery at Le Bourget Airport, on the outskirts of Paris, again with work by Kiefer.

Kiefer's purpose-built sculpture of a crushed, caged field of wheat - inspired by a secret U.S. plan during World War Two to turn Germany into a pastoral, humbled land - fills up the entire hangar housing the airport gallery, which is seen as obvious bait for deep-pocketed art buyers from abroad.

"These galleries are a symbol of the business and marketing of art...It's a war machine," said Laurence Dreyfus, art advisor and curator of the 'Chambres A Part' exhibit at France's flagship FIAC contemporary art fair.

French mayors say 'no way' to repaying banks

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By Lionel Laurent
PARIS, France, Oct 12 (Reuters) - French towns that say they were tricked into taking out risky loans from rescued lender Dexia are refusing to repay them in full and are asking President Francois Hollande for a bailout.

Franco-Belgian municipal bank Dexia was propped up with billions of euros of public money last October, when it become the first banking victim of Europe's debt crisis after its strategy of using short-term borrowing scheme to finance long-term lending came unstuck.

Those loans included an estimated 13 billion euros of risky structured products that went sour after the 2008 financial crisis, saddling thousands of French towns with crippling interest rates.

Frustrated by what they perceive as government inaction over the mounting repayments, mayors in a handful of the towns are tearing up their contracts rather than pay the state-rescued bank with money raised from tax hikes or spending cuts.

"I was not elected to raise taxes and to have those taxes go directly into banks," said Xavier-Martin Le Chevalier, mayor of the northwestern coastal town of Tregastel. "Directly or indirectly, the state will end up having to pay the bill."

Remember mortgage-backed securities? France does.

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PARIS | Thu Oct 11, 2012 6:22pm BST

Oct 11 (Reuters) - French mortgage lender Credit Foncier is to kicks off a securitisation programme that will see it sell around 1 billion euros ($1.29 billion) in mortgage debt in the coming weeks, the bank's chief told Reuters on Thursday.
The move comes as Europe's banks seek to cut their balance sheets in the face of tougher regulation and a sputtering economy. It could be a sign of confidence for a French market mortgage-backed securities market which has been slow to recover from the 2008 financial crisis.
"We will very soon launch a first securitisation programme of mortgage bonds...We are working on an initial size of around 1 billion euros," Credit Foncier CEO Bruno Deletre said in an interview, adding insurers and other funds had shown interest.

(Reporting by Lionel Laurent and Matthias Blamont)

French central bank secretly propped up buckling lender

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By Lionel Laurent

PARIS, Oct 4 (Reuters) - French mortgage bank Credit Immobilier de France (CIF) was benefiting from emergency Bank of France funding to keep it afloat months before a high-profile government rescue, banking sources told Reuters.

The news comes ahead of negotiations between France and European Union regulators on the fate of the bank and its 2,500 staff.

It shows how actively the Bank of France was working behind the scenes to prevent a crisis of confidence hitting the banking sector of the euro zone's second-largest economy.

In a controversial move that jarred with campaign rhetoric of a crack-down on excess risk-taking in the financial sector, French President Francois Hollande agreed last month to guarantee the bank's debt after rating downgrades starved it of funding.

Yet according to one source with direct knowledge of the matter, more than 2 billion euros ($2.6 billion) in emergency funds had been lent by then to CIF via the Bank of France, implying the lender had been struggling to raise money.

"When CIF ran into problems earlier this year it was forced to use the (central-bank) system," one source with direct knowledge of the matter told Reuters. "The exact number is unclear but it was more than 2 billion euros."

Trader job cull continues as banks offload brokers

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Oct 1 (Reuters) - French brokerage Cheuvreux is likely to cut hundreds of jobs as part of Credit Agricole's sale of the unit to rival Kepler, according to two sources familiar with the matter, the latest in a wave of job cuts to hit equity trading firms.

Credit Agricole said in July it was in exclusive talks to sell Cheuvreux, which employs about 700 people worldwide, to independent financial services group Kepler Capital Markets.

"We've been given pretty strong signals that around 350 to 380 jobs are to be cut at Cheuvreux," a union source told Reuters. "We've met with Credit Agricole CIB, they are indicating that this will be the scale of cuts that will hit staff."

(Reporting by Lionel Laurent, Christian Plumb and Astrid Wendlandt)