Société Générale's CEO faced down mounting pressure for his resignation Wednesday over a trading scandal that cost billions...
PARIS — Société Générale’s CEO faced down mounting pressure for his resignation Wednesday over a trading scandal that cost billions, but his reprieve was swiftly followed by questions from the central bank about why operational “malfunctions” were ignored.
The company’s board rebuffed calls by President Nicolas Sarkozy for top executives to face the “consequences” of the huge losses resulting from the unauthorized trading, giving Chairman and CEO Daniel Bouton and co-Chief Executive Philippe Citerne their universal backing.
Bouton had offered to resign as the trading crisis unfolded last week, when the bank said it had lost $7.09 billion in unwinding trades by 31-year-old futures trader Jérôme Kerviel. The board refused his offer.
“The board asked me to stay at the helm of the ship in the storm we are in,” Bouton told France-2 television. “I am a man of duty. I am not going to jump overboard when the board asks me to stay and do my duty.”
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Questions have mounted, however, about how Kerviel could have fooled his superiors, and how Société Générale handled the discovery of his unauthorized transactions.
The bank’s controls “didn’t function like they should have” and “were not followed up appropriately,” Bank of France chief Christian Noyer said at a hearing before the French Senate.
“We must focus on the reasons why the anomalies, the malfunctions, were not spotted, analyzed or passed upward to a high-enough level, dealt with and followed up,” he said.