Jan. 24 (Bloomberg) -- Societe Generale SA said it will seek
5.5 billion euros ($8.1 billion) in new capital after discovering
a case of trading fraud and taking further writedowns linked to
the U.S. subprime mortgage market crash.
The bank discovered last weekend that a trader in Paris had
secretly set up positions that will cost the company 4.9 billion
euros before tax, Societe Generale said in an e-mailed statement
today. The trader, who wasn't identified, went beyond permitted
limits on futures linked to European stock indexes.
Societe Generale will also take 2.05 billion euros in
writedowns related to credit market turbulence. The bank said it
will still make a profit of between 600 million euros and 800
million euros for 2007. An offer by Chairman Daniel Bouton to
resign was rejected by the board, the bank said.
Societe Generale yesterday fell 4.1 percent to 79.08 euros,
its lowest since May 2005, valuing the bank at 36 billion euros.
The shares have fallen 20 percent since the start of the year,
hurt by expectations of further writedowns.
The company said it plans to raise the capital by selling
shares in a rights offer underwritten by JPMorgan Chase & Co. and
Morgan Stanley.
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