The bank's board also said on Wednesday it had set up a special committee of independent directors to ensure that the cause and size of its rogue trading losses were fully accounted for.

The panel will be led by a Jean-Martin Folz, former head of French carmaker PSA Peugeot Citroen.

The bank has been in turmoil since revealing 4.9 billion euros (S$10.3 billion) of losses, which it blames on rogue share trades by one 31-year-old junior employee, Jerome Kerviel.

SocGen's board is keen to fight off potential predator BNP Paribas and asked executive chairman Daniel Bouton and his deputy Philippe Citerne to stay on through the crisis. But its shares rose for a second day on takeover speculation.

Mr Bouton said SocGen was strong enough to stay independent.

Politicians from President Nicolas Sarkozy down have called for sweeping changes in the wake of scandal.

But in his first television interview on the crisis, Mr Bouton said: 'The board is asking to stay at the helm of the boat during this storm. I'm a man of duty. I'm not going to jump overboard when the board is asking me to stay to do my duty.'

Asked whether he was now the head of a bank which could be taken over, he said: 'The strong determination of our customers, the strong determination of our staff, is offering an answer.'

The bank's announcement that it was keeping its top people in place appeared to rebuff a demand from Mr Sarkozy that the bank's leaders should face up to their responsibilities. A statement from the new committee said they had done exactly that, by offering to resign, yet staying on when asked.

French media said the decision to hand over the key internal inquiry to independent directors meant Mr Bouton would now operate on a tight rein, something the aloof 57-year-old banker may not tolerate for long.

The 15-strong board has now twice backed Mr Bouton, who offered to resign as soon as the bank uncovered the risky positions.

Investors were surprised to see him still in place.

'I find this very extraordinary,' said Mr Dirk Thiels, head of global equity funds at KBC Asset Management.

'What we have seen at US banks is that all the top people resigned when there were bad investments,' he said.

'If a shareholder can't trust senior management to take responsibility for controlling the actions within an organisation, who has to be responsible?' he added.

Kerviel, the trader at the centre of the scandal, was placed under formal investigation for breach of trust, computer abuse and falsification on Monday, but judges threw out a more serious accusation of attempted fraud.

Bank of France Governor Christian Noyer said the trading debacle highlighted a flawed set-up at SocGen.

'The first observations appear to tell me, and I speak with prudence, that all the permanent controls at Societe Generale do not seem to have worked as they should have. And those that did work were not followed in an appropriate fashion,' Mr Noyer told a hearing of France's upper house of Parliament.

He disclosed SocGen was told in 2007 to improve its controls on even more complex derivatives than the ones used by Kerviel.

The SocGen trading scandal has shaken France's image of itself as a refuge against unfettered capitalism. Up until now, the country has avoided many of the heavy blows dealt to United States investment banks hit by losses in the US housing market.

Bid talk won't go away
Mr Bouton, author of a blueprint on how to run a French company, himself has pledged the bank will bounce back from its humiliation over illicit bets worth US$70 billion (S$99 billion) done by Kerviel.

SocGen shares rose 4.3 per cent to 81.8 euros but traders said this was driven more by continued speculation of a bid by BNP Paribas for its weakened rival, than the survival of Mr Bouton.

SocGen has a stock market value around 38 billion euros.

A French report said Mr Bouton was open to a friendly offer, but the bank said this was 'without foundation'. A spokesman said the topic was not discussed at Wednesday's board meeting.

Prime Minister Francois Fillon said this week that he was determined that SocGen should remain a 'great French bank'.

His remarks turned the spotlight back onto longstanding speculation of a tie-up between SocGen and BNP Paribas, France's biggest listed bank which has a market capitalisation of around 60 billion euros.

In 1999, BNP Paribas narrowly failed to buy SocGen.

BNP Paribas refused to comment on the SocGen bid talk as it presented an estimate of its 2007 results on Wednesday.

'In recent months, BNP Paribas has made it clear that a tie-up with SocGen is not on the agenda. However, we would expect that BNP Paribas' management to be more amenable to a deal now, as SocGen's share price has fallen significantly,' ING analysts said in a research note.

Other analysts have speculated that SocGen might be broken up with its retail branches going to BNP and its investment banking to another French bank, Credit Agricole, which declined comment.

Unions say that could mean cuts in SocGen's 130,000 staff.

'We will oppose any dismantling or takeover attempt of Societe Generale,' said Michel Marchet from the CGT union. -- REUTERS