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French finance ministry releases SG post mortem
The French finance ministry called for better risk management and oversight at Société Générale (SG), and heavier fines for non-compliant banks, in a preliminary report issued today.
Although SG informed regulators - the Bank of France and the stock market regulator, the AMF - on Sunday, January 20, the ministry was not informed until the morning of Wednesday, January 23. The two regulators decided there was too much risk of a leak from the finance ministry to the public, the report says, adding "it would without doubt have been desirable for the government to be informed earlier".
In a list of possible changes, the ministry said SG should have monitored nominal positions as well as net positions, kept a closer eye on margin calls and payments, investigated more fully after the first warning from the Eurex exchange in November 2007 and confirmed trades more rapidly.
Given the cost of making these improvements, the ministry also said it needed the power to impose much heavier fines for non-compliance - at present it is limited to a maximum of €5 million, which is too small compared with the cost of compliance to give banks an incentive to improve.
The full report is available online from the finance ministry at www.minefe.gouv.fr.
See also: Escoffier credits customer support for SG
SG gives details of fraud, but questions remain
Shake-up at SG follows rogue trader losses
"He didn't want to tell the truth immediately"
€4.9 billion fraud at Société Générale
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