French bank defrauded of Dh26.4b

Societe Generale, one of France's largest banks, has uncovered fraud carried out by a Paris-based trader which has resulted in a loss of 4.9bn euros (Dh 26.4b).

"One trader... had taken massive fraudulent directional positions in 2007 and 2008 beyond his limited authority," the bank said.

Daniel Bouton, Chief Executive officer of Societe General offered his resignation but it was rejected by the board, the bank said.

According to a spokesperson from the bank the trader had confessed to the fraud and was being dismissed.

Despite the huge amount defrauded from the bank Societe General reported that it would still make a profit of 600m to 800m euros for 2007.

Trading in the bank's shares, have fallen by almost 50% in the past six months, has been suspended.

The French bank will need to seek 5.5bn euros in new capital to recover the losses.

The company will announce its full year finanacial results on February 21, and it said that it expect its 2007 net income to be in the range of 600m-800m euros.

Societe Generale is also going to raise 5.5bn euros through a capital increase "to strengthen its capital base".