Bad Month: Société Générale

It’s been a rough few months for banks, with dodgy debts laid bare and share prices tumbling. For France’s second-largest bank, Société Générale, fraud was added to these woes as arbitrage trader Jerome Kerviel was implicated in events that have led to €4.9 billion (£3.7 billion) of losses, not to mention further falls in the bank’s share price and an incalculable loss of reputation.

It was Kerviel’s job to make money from minute differences in the prices of financial instruments, always balancing one portfolio against another so that potential losses were limited.

Not content with this, Kerviel took what was in effect a one-way bet on European stock markets. Had they gone up, he might have been hailed as a financial genius (at one point his position was €1.4 billion in the black, according to reports). But of course they didn’t.

Now the bank has been mooted as a bid target, with fellow French bank BNP Paribus, which made an unsuccessful takeover attempt in 1999, a favourite to snap it up.

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses. More by Marc Barber