Societe Generale fraud generates downgrade
Big French bank Societe Generale has been made to pay an early price for the $8 billion fraud perpetrated by a rogue trader, with FitchRatings downgrading the bank’s long-term issuer default rating to double A minus.
FitchRatings said the action followed the profit warning made by the bank related to the alleged fraud perpetrated by the rogue trader.
It said that while it understood that Societe Generale had been the victim of a fraud undertaken by one single trader under very specific circumstances, “the extent to which the fraudulent positions taken were concealed raises serious questions about the effectiveness of the bank’s processing systems and creates reputational risk for the group”.
The ratings house said it expected 2008 to be a difficult year for Societe Generale and was not able to determine the extent to which the erosion of the bank’s reputation in the markets would affect its ability to retain leadership in its key fixed income and equity activities.
AUTHOR
Mike Taylor
Recommended for you
Retail investment into private credit funds could surpass that of sophisticated investors, according to ASIC, but the regulator admits it is unsure how and where these individuals are first being introduced to the vehicles.
With the high cost of advice keeping young Australians locked out of advice, a fintech provider has said digital advice is key for licensees to capture this unadvised demographic.
ASIC chair Joe Longo has announced he will step down at the end of his term, departing the corporate regulator in May 2026.
When it comes to the phase-out of AT1 bonds, Schroders fixed income manager Helen Mason has urged financial advisers to sell up sooner rather than later or risk capital losses.
