The giant bank said yesterday that the futures trader, who is in his 30s, fooled investors and his own superiors in constructing the massive and complex scam over the course of last year.

SG detected the fraud, which it called 'exceptional in its size and nature', at its French markets division last weekend.

It said the trader, identified as Jerome Kerviel by a source close to the case, was responsible for making bets on how European share markets would perform at a future date. It added that he misled investors with a 'scheme of elaborate fictitious transactions'.

He had worked for the bank since 2002 and earned a salary and bonus of less than 100,000 euros (S$210,000), SG executives said.

The unnamed trader used his knowledge of the group's security systems to conceal his fraudulent positions, said SG, which has a significant operation in Singapore.

The man confessed to the scam and is being sacked, as are his supervisors. Chairman Daniel Bouton offered to resign, but this was rejected by the board.

Mr Bouton said yesterday: 'This was not a trading loss. This was a lone man who built a concealed enterprise within the company, using the tools of Societe Generale, and who had the intelligence to escape all control procedures.'

The massive fraud has rocked SG, France's second largest bank by market value and one of Europe's most prestigious.

It comes at the worst possible time, given the sub-prime crisis hitting the global financial system. SG has already written down 2 billion euros owing to sub-prime losses.

The French bank said it would be forced to seek 5.5 billion euros in new capital to shore up its operations.

Its shares, which have lost nearly half their value over the past six months, were suspended on the Paris bourse. It was unclear when trading will resume.

The news initially caused a wobble in rallying Asian markets and was blamed for Hang Seng's reversal into the red just before the Hong Kong market closed.

But European stocks surged yesterday after investors digested the news and concluded the trouble will be contained within SG.

If the fraud is proven, SG's US$7.15 billion loss will eclipse the US$6 billion loss racked up by trader Brian Hunter and his Amaranth hedge fund team before it collapsed in 2006.

It will also remind many Singaporeans of Leeson, a convicted trader who brought down Barings Bank by racking up losses of US$1.4 billion while working in the Republic.

Singapore is a key Asian base for SG. It provides services such as commodity trade finance, energy risk management, private banking and asset management. Last year, it managed well over US$17 billion in private banking assets for wealthy individuals in Asia, and has more than 600 staff in the region, with more than 200 here.

ASSOCIATED PRESS, AGENCE FRANCE-PRESSE, REUTERS

FRAUD AT SG FAILS TO DAMPEN PARTY MOOD AS MARKET RALLIES, MONEY