Jerome Kerviel in last-ditch plea for acquittal

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By Lionel Laurent
PARIS, June 28 (Reuters) - Former Societe Generale trader Jerome Kerviel made a last-ditch plea to clear his name before a Paris court on Thursday, capping his month-long appeal of a three-year jail sentence for his role in France's biggest rogue-trading scandal.

Addressing the crowded, hot courtroom after his lawyer's closing arguments, Kerviel said his name had been dragged through the mud from the day SocGen revealed in 2008 it had lost 4.9 billion euros ($6.09 billion) unwinding his huge, risky bets.

"I've lost four years of my life," the 35-year-old former trader said in hushed tones. Dressed in a pink shirt and navy suit, he looked physically weak and had to leave the courtroom several times on account of the heat during Thursday's hearing.

Kerviel has never denied masking the huge 50-billion-euro positions that tore a hole through SocGen's balance sheet and reputation at the dawn of the financial crisis. However, he has always insisted his superiors knew what he was doing and reiterated on Thursday he had "never lied" to the court.

"I was part of a system gone mad," he told the presiding judge, and offered his apologies to SocGen's employees.

Investors wary of SocGen's toxic loan swamp

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By Lionel Laurent

PARIS, June 25 | Mon Jun 25, 2012 3:59pm BST

(Reuters) - Societe Generale's long-running battle to cleanse its balance sheet of toxic assets left over from the 2008 financial crisis i s putting investors on their guard.

They worry the sense of urgency in dealing with the problem is fading at a time when economic growth is flatlining across the euro zone, which is being reflected in SocGen's poor stock-market valuation relative to other European banks.

"(SocGen) is trying to cut its stock of illiquid assets but you can tell it's tricky," said Yohan Salleron, a fund manager at Mandarine Gestion, which has around 1.5 billion euros ($1.88 billion) under management.
"We prefer (domestic rival) BNP Paribas."

French banks to keep running from Greece despite vote

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By Lionel Laurent

PARIS, June 18 | Mon Jun 18, 2012 7:59pm IST

(Reuters) - French banks, the top foreign lenders to Greece, are expected to continue their quiet retreat from the debt-wracked country after Greek voters gave a slim majority to parties supporting the international bailout that keeps it afloat.

The conservative New Democracy party beat the field in Sunday's election, pushing into second place the anti-bailout leftist SYRIZA party, and calming the nerves of those who believed a SYRIZA victory would have led to Greece's exit from the euro zone and financial chaos across the continent.

But with the euro zone debt problems unresolved and Greece's political and financial stability far from assured, industry insiders and analysts say French banks will probably keep shifting assets out of the country, cutting funding ties to local units and writing down the value of Greek holdings to draw a line under years of losses.

French lenders including Credit Agricole and Societe Generale held an estimated cross-border Greek exposure of $44 billion at end-December, according to Bank for International Settlements data, putting them most at risk of a sudden, messy Greek exit from the currency union.

Greece is still in the fifth year of recession and carrying debt equivalent to about 160 percent of GDP, and if it can cobble together a ruling coalition, faces years of austerity before a return to growth, but at least the doomsday scenario has been averted for now.

"This gives banks a bit of headroom, a bit of space to try to find a lasting solution to the Greek issue," said a French banking source, adding that there was nothing in the election result that would change the strategy of cutting back on Greek exposure. "There is a structural problem in the Greek market that has to be resolved. The alternative would be to accept regular losses in the hundreds of millions of euros."

For French banks, breaking up is hard to plan

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By Lionel Laurent

PARIS | Fri Jun 8, 2012 1:27pm BST

(Reuters) - French banks are hoping for the best while planning for the worst.
The country's top lenders are exploring a variety of options ahead of expected moves by new President Francois Hollande to split up their operations.


Ring-fencing banks' risk-taking businesses from mainstream retail functions was a key plank of Hollande's election campaign, which also promised to hit lenders with more taxes and tighter regulation.

In response, the banks are mounting a rearguard lobbying action to limit what could be the hefty costs of potential legislation.

With the support of their regulator and the French Treasury, lenders have defended the "universal bank" model under which a bank sells everything from unglamorous household loans to complex derivatives.

The banks regard this model as less prone to failure than pure-play businesses like Northern Rock or Lehman Brothers.

But at the same time, bankers and industry sources say, lenders including BNP Paribas and Societe Generale are testing a range of scenarios, from ring-fencing retail banking units on the lines of the UK's Vickers Reform to more specific limits on trading and investing like those set out in the U.S. Volcker Rule.

"The banks are all lobbying hard to limit the fallout," said a person familiar with the matter. "Ultimately with this kind of debate it ends up boiling down to terminology - what is 'risky', what isn't - and the final product ends up not changing much."

French banks draw up Greek exit plans, sources say

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By Lionel Laurent and Christian Plumb

PARIS | Fri May 25, 2012 4:12pm BST

(Reuters) - French banks, which are among the lenders most exposed to Greece, have stepped up their efforts on contingency plans for the debt-laden country leaving the euro zone, sources familiar with the situation said.

The heightened preparations by banks, including Credit Agricole (CAGR.PA), BNP Paribas (BNPP.PA) and Societe Generale (SOGN.PA), come after euro zone sources told Reuters earlier this week that each member of the common currency would have to prepare a plan for a possible Greek exit.


"Every bank has a task force right now looking at the potential consequences of a return to the drachma," a Paris-based banker said.

At end-Dec 2011, total French cross-border lending to Greece was $44.4 billion (28.3 billion pounds), higher than Germany's $13.4 billion, according to preliminary Bank for International Settlements data tracking consolidated foreign claims of reporting banks on an ultimate risk basis.

"The banks are doing contingency planning concerning a Greek exit, but you can understand why they wouldn't say so publicly," a consultant to French banks said.

President Hollande's savings raid spooks banks

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By Lionel Laurent

PARIS | Fri May 18, 2012 11:35am BST

May 18 (Reuters) - French President Francois Hollande's plan to use savers' deposits to boost state investment power could suck billions of euros out of banks, depriving them of a major source of funding as they struggle through the euro zone debt crisis.

The centre-left president, marketing himself as a pro-growth alternative to German-led budget austerity, has pledged to double the amount people can put into tax-free, state-guaranteed savings accounts before the end of June.


The government aims to use money from these expanded accounts - which Hollande has promised will pay interest at an attractive above-inflation rate - to help fund additional building and infrastructure projects.

However, while the move may provide an expansionary pick-me-up to the economy and please hard-pressed French savers, it could spell trouble for lenders like BNP Paribas and Societe Generale.
Already on the defensive from regulations designed to crack down on risk, French bankers fear an exodus of deposits from their own savings accounts to 200-year-old state lender Caisse des Depots et Consignations (CDC), reducing their access to cheap funding.

Cheuvreux analyst Pascal Decque estimates French banks could see up to 83 billion euros ($106 billion) make their way to CDC, founded in 1816 when France was in dire economic straits after the Napoleonic Wars.

"You've got funding pressures on all types of areas for the French banks," said Espirito Santo analyst Andrew Lim. "(Hollande's plan) is going to put pressure on market deposits." 

French whizzkid trader at centre of JPMorgan bets

(Full story)

By Matt Scuffham and Lionel Laurent

LONDON/PARIS | Fri May 11, 2012 2:44pm EDT

(Reuters) - Bruno Iksil was dubbed the 'London Whale' in credit markets due to the size of the trading positions he took, but for years he stayed well below the surface avoiding detection.
Now, the French-born JPMorgan trader has been dragged from the anonymity of the trading floor into the eye of a very public storm over a $2 billion trading loss at the U.S. investment bank where Iksil worked in a little-known group called the Chief Investment Office (CIO).

Friends, colleagues and fellow traders describe an unassuming man, a far cry from the brash image normally associated with traders staking huge bets in fast-moving financial markets, including derivatives.

"He's a really nice bloke. A quiet bloke. He's not an arrogant trader, he's quite the opposite. He's very charming," one former colleague at JPMorgan said of Iksil, whom he said was married with "a couple of kids".

Iksil, who graduated in engineering in 1991 from the Ecole Centrale in Paris, looks older than he is, seldom wears a suit, and according to ex-colleagues lives outside central London.

"He's a balding chap with grey and dark hair. I'd say he's in his 40s," the ex-colleague said, adding that there were not many young traders in CIO, a relatively isolated group where everybody was in their thirties and forties.

"Nobody wears suits in CIO. You don't meet clients face to face," he added.

There have been no suggestions that Iksil's activities were in any way irregular, but over a period of years he and his team amassed a book of bets estimated by some to be $100 billion.