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French bank reports trading loss of €600 million

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by Kay Mitchell

French bank Caisse d’Epargne has owned up to losing €600 million (£466 million) in a ‘market incident’.

The bank, which is in the process of merging with Banque Populaire, said the extreme volatility in the markets meant that it experienced a significant market incident in share derivatives that led to the loss.

However, the bank said that the losses would not affect its customers or put its financial viability at risk.

According to a report by the AFP news agency, following the incident a finance director had been dismissed while six members of the team that made the trades had been sanctioned.

The merger of Caisse d’Epargne and Banque Populaire will produce one of France’s largest banks with over six million customers and €480 billion of deposits.

In related news, earlier this week fellow French bank, Société Générale, was forced to deny it was in trouble and might need emergency funds due to rumours of a big derivatives loss.

Meanwhile internet bank Cahoot, owned by Spanish bank Santander, has warned customers that any transactions made since 0730 on Wednesday might not be displayed for 24 hours despite being processed.

Cahoot, which has 750,000 customers, apologised and said any money lost as a result of the delay would be able to be claimed.

The problem was due to a power cut in Spain and also affected Abbey, also owned by Santander.

Santander, which has now taken over Alliance & Leicester, is one of the world’s most successful and well-capitalised banks with almost 70 million customers.

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News posted: October 17, 2008

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