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| Version 1 | Version 2 |
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| SocGen controls 'failed to work' | |
| (about 2 hours later) | |
| France's Finance Ministry has called for tighter banking controls after the Societe Generale trading scandal. | France's Finance Ministry has called for tighter banking controls after the Societe Generale trading scandal. |
| Christine Lagarde, France's economy minister, said some of the bank's internal controls failed to work. | |
| She made the comments as she delivered a report on the bank's trading losses to the French government. | She made the comments as she delivered a report on the bank's trading losses to the French government. |
| The bank blames junior trader Jerome Kerviel, 31, for a 4.9bn-euro ($7bn; £3.7bn) loss, though he has reportedly said it knew the risks he was taking. | |
| "Very clearly, certain mechanisms of internal controls of Societe Generale did not function, and those that functioned were not always followed by appropriate modifications," Ms Lagarde said. | "Very clearly, certain mechanisms of internal controls of Societe Generale did not function, and those that functioned were not always followed by appropriate modifications," Ms Lagarde said. |
| One cannot say that the unwinding of positions by Societe Generale provoked a market fall in Europe Christine Lagarde, French Economy Minister | |
| The report also said that inspections by the Bank of France's banking commission had previously found weaknesses in Societe Generale's control system. | |
| "Inspections by the banking commission carried out in 2006-7 had led to recommendations seeking to strengthen the security of operations," a summary of the report said. | |
| The report into the scandal also called for clearer divisions between the roles of government and regulators, and it recommended the banking commission be able to impose tougher penalties. | The report into the scandal also called for clearer divisions between the roles of government and regulators, and it recommended the banking commission be able to impose tougher penalties. |
| It also proposed talks with major trading partners on the scandal to ensure that international standards apply. | It also proposed talks with major trading partners on the scandal to ensure that international standards apply. |
| Rules followed | Rules followed |
| Ms Lagarde said the bank followed rules on disclosure of market information when it unwound the unauthorised transactions by Mr Kerviel. | Ms Lagarde said the bank followed rules on disclosure of market information when it unwound the unauthorised transactions by Mr Kerviel. |
| Jerome Kerviel, the reported rogue trader | |
| "The unwinding of the positions at the source of the loss on 21, 22 and 23 January was done in a professional way in difficult market conditions that could not be attributed to Societe Generale," Ms Lagarde said. | "The unwinding of the positions at the source of the loss on 21, 22 and 23 January was done in a professional way in difficult market conditions that could not be attributed to Societe Generale," Ms Lagarde said. |
| Some analysts have said Societe Generale was behind sharp falls in European stock indexes during January. | Some analysts have said Societe Generale was behind sharp falls in European stock indexes during January. |
| "One cannot say that the unwinding of positions by Societe Generale provoked a market fall in Europe," she told the banking commission of the French lower house of parliament. | |
| The bank's chief Daniel Bouton has been under pressure to resign over the trading scandal, but last week the Societe Generale board gave Mr Bouton their backing. | The bank's chief Daniel Bouton has been under pressure to resign over the trading scandal, but last week the Societe Generale board gave Mr Bouton their backing. |
| The report did not seek to assign blame for scandal, which has rocked France's banking sector and triggered talk that Societe Generale could be taken over or split up. | |
| Mr Kerviel is being investigated for breach of trust, falsifying documents and breaching computer security - but not the more serious charge of fraud. | |
| Societe Generale says Mr Kerviel had an unauthorised position, or a bet, worth about 50bn euros on the future direction of European shares. | |
| To avoid that potentially catastrophic loss, the bank had to unwind Mr Kerviel's trades, but that still cost it 4.9bn euros. |