Why are there so many rogue traders in France?

21 October 2008

1 minute read

Why are there so many rogue traders in France?

Is it coincidence that two out of the four major rogue trading incidents of the past year have occurred at French banks?

First there was SocGen's €4.9bn hit following an alleged €50bn of futures positions run up by Jérôme Kerviel. And then last week, Caisse d'Epargne suffered a €600m (466.6m) loss on unauthorised equity derivatives trading.

Caisse D'Epargne has been quick to evict its chief exec, chairman and head of finance after six of its equity derivatives prop traders exceeded their risk limits and wrongly bet that stock markets would rise.

Apparently sensing a possible systemic problem, finance minister Christine Lagarde has ordered an emergency audit of all French banks to ensure the same thing doesn't happen again.

Is she right to be worried? SocGen certainly stands accused of weak procedures, poor implementation and bad management, but are French banks any more susceptible to rogue traders than others?

Or are two French rogues in a row just bad luck?

AUTHOReFinancialCareers UK

Insider Comment

Gr
Greg the french
18 November 2008
These events are known to us because they have been disclosed..how many rogue traders in the UK who lossed considerably more money (except Kerviel off course!) and never were publicly spoken of ?
I think this question is of little relevance...instead, you should ask...why are there so many failed banks in great Britain ?
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In
Investment Dan
27 October 2008
This is an easy one to answer in one word "Nepotism". In France individuals get into schools/uni and as that follows into responsible jobs/roles at French banks etc.. So in essence we have the French equivalents of "Tim but Dim's" making bets they haven't got the brain power to understand!!!
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Mi
Milan
27 October 2008
French recruitment system is only based on diploma rather than skills... So you end up with people that should not do what ther're doing...
And French models are rubbish.. no one really understands them...
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Da
Dave
27 October 2008
french maths grads are extremely clever... but having worked with them at two french banks find them extremely arrogant and superior to everyone else.
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ib
ibankee.com
24 October 2008
You could add Calyon last year (250m).
The problem with Caisse d'Epargne is not really rogue trading. CE is a retail bank and has nothing to do on financial markets.
They built a small team to play with their money instead of investing it normally as any treasurer would do, they did not put limits on their trader or did not react even when they knew the positions were huge, and they left a single guy bet a big part of the money on a single bet.
This is just a story of another wannabe who failed, excepted that he was given a few billions.
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