Paris: French banking giant Societe Generale says a single trader is responsible for a massive €4.9 billion ($7.2 billion) fraud at the bank.
Trading in the bank's shares was suspended on the Paris Stock Exchange after the revelation of the fraud along with a €2.05 billion ($2.99 billion) loss stemming from the crisis in US sub-prime mortgage market.
The bank said one of its traders, who has not been named, had taken 'massive fraudulent directional positions' in European index futures that were beyond his trading limits, and created false transactions to cover up his fraud.
"I have the duty to inform you that the management of Societe Generale has discovered an internal fraud of a considerable scope, carried out by a member of staff in its financing and investment division," the bank said in a statement.
The statement said the actions of the trader and his department had been scrutinised and it had been decided that he had acted on this own. The fraud was carried out between 2007 and the start of 2008.
"The trader who admitted his actions has had his contract terminated. Those responsible for his supervision have also left.
"His previous knowledge of the main system of check and safety procedures, acquired during his work in middle management, has allowed the trader to conceal his activities, and mount elaborate fictitious transactions."
The bank said it discovered the fraud over the weekend and confirmed it was an isolated case. The bank said Chairman Daniel Bouton had offered to resign but the board rejected it.
Shares in the bank closed down 4.1 per cent on Wednesday. In the past six months it has lost nearly half of its market value. Full-year results will be announced February 21
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