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PARIS - FRANCE'S top central banker has expressed amazement that the trader at the heart of a Societe Generale trading scandal evaded detection for so long and backed tougher fines on banks for lapses in controls.
'The reality is that we can't explain it. It seems improbable, it seems incomprehensible to us,' Bank of France Governor Christian Noyer told the finance committee of the lower house of Parliament on Tuesday.
Mr Noyer, who last week said he warned SocGen less than a year ago to improve its market control systems, addressed Parliament for the second time in five days on the scandal that has humbled France's second-biggest listed bank.
SocGen unveiled 4.9 billion euros (S$10.2 billion) of losses nearly two weeks ago which it said were caused by rogue deals executed by Jerome Kerviel, a 31-year old junior trader at the French bank.
In his first media interview since the scandal erupted, Kerviel said that he would not be turned into a 'scapegoat'.
'I take my share of the responsibility but I will not be turned into a scapegoat by Societe Generale,' he was quoted as saying.
'You lose any notion of the amounts involved in this type of job. It's abstract. You get a bit carried away,' he said.
Kerviel is under formal investigation, a stage short of formally being charged, for breach of trust, computer abuse and falsification. He is free under judicial supervision, which resembles bail.
Mr Noyer said the scandal could 'only result from a succession of what I hope are small errors, of small inaccuracies, of alerts that never went far enough, probably the techniques of fraud in the generalised sense which seems quite unprecedented'.
'Frankly, I can't explain it and it is what I am waiting for most impatiently from our investigation.'
The Bank of France's Banking Commission should complete its inquiry in at least two months, an official said.
Bid talk lingers
Interviewed in his lawyer's office, Kerviel dismissed speculation about his health and the news report said he was relaxed and smiling.
'I am not suicidal or depressive,' he was as reported saying.
Kerviel was questioned for a second time by magistrates for eight hours on Monday, a judicial source said.
The SocGen scandal has rocked France's political establishment. On Monday, French Economy Minister Christine Lagarde said it highlighted major shortcomings at SocGen.
'For me, the analysis undertaken by Madame Lagarde describes what happened very well,' Mr Noyer said.
SocGen shares closed down 5.3 per cent at 79.20 euros, amid a broader slump in markets due to fears of a recession. SocGen has a current stock market value of around 37 billion euros.
As a result of the trading losses, the bank plans a 5.5 billion euro capital increase and will suffer a slump in annual profits. It has also turned SocGen into a likely takeover target.
United States investment bank Merrill Lynch said in a research report that it saw a 70 per cent chance of a takeover of SocGen. Merrill raised its price target on SocGen to 116 euros from 90 euros and reiterated a 'buy' rating on SocGen shares.
The Merrill Lynch report also said a takeover of SocGen could come in the form of a break-up consortium, involving French banks BNP Paribas and Credit Agricole with Italy's Intesa Sanpaolo.
BNP Paribas narrowly failed to buy SocGen in 1999.
France's top politicians have repeatedly expressed their determination to ensure that SocGen is not taken over by a foreign bank. -- REUTERS
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