Word: banking
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...trader secretly concocts bogus transactions for months, in an attempt to cover his spiraling losses, until he has siphoned off billions of euros from under the noses of one of France's most venerable institutions. For Société Générale - France's second-biggest bank - the details were all too real, however, as stunned executives attempted to explain on Thursday how a mid-level employee lost 4.9 billion euros ($7.2 billion) in a rogue operation without anyone noticing...
...what could be one of the biggest inside frauds in banking history, French futures trader Jérome Kerviel, 31, effectively created his own trading firm within the bank's market rooms, according to Société Générale CEO Daniel Bouton. "He succeeded in building this hidden firm, in building his positions by hiding them by other positions that were totally fictional," Bouton told reporters at a Paris news conference on Thursday. "That is what is so extraordinary about this case." Bouton's offer to resign was rejected by the bank's administrators this week...
Kerviel's identity was revealed on the Financial Times and Daily Telegraph websites, but was not confirmed by bank officials, who admitted on Thursday that the rogue trader appeared to have gone to ground and that they had no idea where he was. Executives said two years ago, the trader had a back-office job in the bank working on internal controls to prevent questionable and suspicious trades. He then transferred to a position trading in so-called "plain vanilla" stock futures in European markets. He earned a salary of about 100,000 euros (about...
...Bank executives said they finally realized their mammoth problem last weekend. Société Générale chief executive of corporate and investment banking Jean-Pierre Mustier told reporters that he was "convinced [Kerviel] acted alone." Kerviel confessed to the elaborate fraud during a six-hour grilling by bank officials on Saturday night, according to the Daily Telegraph, which posted a photograph online of a slender, dark-haired man. Despite the weekend revelations, three days lapsed before executives suspended trading of Société Générale shares. They declined to tell reporters...
...Europe has seen some of the same warning signs as the U.S., including an overvalued housing market. A worldwide slump would be a special concern in poorer countries, says Ngozi Okonjo-Iweala, a former finance minister of Nigeria who is now a managing director of the World Bank. Food prices there, she notes, are already being driven up in part by demand for biofuels, which is leading to the substitution of food crops by those that can produce fuel. If food stays expensive yet economies in Africa and elsewhere slow, there could be big trouble...