SocGen offers discount shares

Beleaguered French bank Societe Generale has taken steps to raise some much-needed Euro readies, and seen its shares plunge 6% as a result. But the bad news doesn't end there...

Last Updated: 31 Aug 2010
The bank’s latest move involves an emergency rights issue, in which it offered shares at a discount of 39% against the market price. The scale of the discount has caused a stir among analysts, but it should generate EUR5.5bn. And SocGen had to do something. As well as dealing with the fall-out from the biggest-ever rogue trading scandal – cost so-far, EUR4.9bn - it has also revealed a further £450m asset write-down as a result of the sub-prime crisis, taking its losses there to EUR2.6bn. Not exactly chump change. So you can’t blame a little desperation in trying to line its pockets.

We wouldn’t usually go in for kicking the French while they’re down, but given that we won’t get the chance to do it in football’s European Championships this summer, we couldn’t resist sticking the boot in again. Only a week or so ago, its government tried to block foreign banks from buying SocGen, despite having signed up to an EU directive designed to curb protectionist activity in that sector. It’s not exactly a legal move, but President Sarkozy won’t care too much – he’ll just be happy to get back to his rom-com of a personal life.

Meanwhile the Paris appeals court has ordered rogue trader Jerome Kerviel to be detained for the course of the investigation. Meanwhile police have released another broker, from SocGen subsidiary Fimat, without charge. It seems the case of SocGen and the missing EUR4.9bn will rumble on for a little while yet.

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