French bank Société Générale has launched a heavily-discounted €5.5 billion fundraising to prop up its finances and protect the bank from takeovers following the financial industry's biggest rogue trading scandal.
SocGen chief Daniel Bouton insisted yesterday that the French bank had an independent future as shareholders were given a larger than expected discount of 39 per cent on last Friday's share price in a fundraising that will help fill the €4.9 billion hole blamed on rogue trader Jérôme Kerviel. In an interview yesterday, Mr Bouton said: "Questions about the longer-term future might be discussed later." He declined to comment on takeover rumours, but said the bank was "not a takeover per se".
Investors and analysts, who had forecast a 30 per cent discount, said SocGen appeared anxious to guarantee the fundraising that could be crucial to its hopes of staying independent. SocGen shares fell 4 per cent, closing at €74.59, with France's benchmark CAC 40 index down 0.6 per cent.
SocGen said it expected net profit of €947 million in 2007 but warned that in 2008, the first half would be affected by poor market conditions. But the bank pledged to return to growth by 2010 and offered investors the right to buy one share for every four held at a price of €47.50 each. Speculation over a bid for the bank has been mounting since last month, when SocGen revealed massive trading losses and blamed Mr Kerviel for unauthorised gambling on the stock markets.
French rival BNP Paribas and London-based HSBC have been linked with bids for SocGen.
The French bank has also increased its subprime losses to €2.6 billion for last year from €2.05 billion. Despite being sharply criticised by the French authorities for its poor internal controls, SocGen insisted it would "remain one of the most solid institutions" and its "key strengths and profit-making capacities remain intact".
A second trader, Moussa Bakir of Newedge brokerage, was released without charge after being questioned over weekend.
(Additional reporting: Financial Times service)
