The board of Société Générale yesterday defied a chorus of public and political criticism to back the bank's embattled chairman Daniel Bouton.
However, in an attempt to restore faith in the bank, which has been rocked by the industry's biggest rogue trading scandal, the group's independent directors have created a special committee to oversee management's res-ponse to the crisis that has already cost SocGen €4.9 billion.
This is a blow to Mr Bouton's standing as executive chairman. But directors said there was no reason for him to leave in coming months. "If he leads us through the crisis, there is no reason why he should go," one said.
Mr Bouton, who offered to resign when the news of the crisis first broke last week, is widely regarded as the best defence against a possible hostile bid for SocGen, having already seen off a hostile bid from BNP Paribas in 1999. Many fear the bank will be much more vulnerable if he goes.
However, the fate of Jean-Pierre Mustier is less certain, despite the fact that the board yesterday agreed to keep the executive in place as head of corporate and investment banking, the division where the losses occurred.
One director said his departure was likely: "It was 50/50 whether he should go now or later." But the board decided to wait for the outcome of its independent inquiry before deciding on any more departures. PricewaterhouseCoopers has been hired to conduct the inquiry.
At the board meeting yesterday, Mr Mustier set out what measures were being taken to ensure the scandal could not be repeated. It appears that although products and businesses were subject to vertical controls, there had been no cross-checking, which enabled the rogue trader, Jérôme Kerviel, to avoid checks.
Mr Kerviel, whose unauthorised bets led to the biggest trading loss in history, told prosecutors the bank was "complacent" about his practices. "As long as we were winning and it wasn't too visible, things worked out, no one said anything," Mr Kerviel told police in a transcript cited by Le Monde, which was confirmed by the prosecutors' office.
Mr Kerviel was charged on Monday with breach of trust, falsifying documents and hacking into computer systems. He was released from custody after turning in his passport, and was ordered not to leave France, associate with the bank or engage in trading.
