French Economy Minister Christine Lagarde said yesterday that Societe Generale (SocGen), hit by US$7 billion in losses from rogue trades, was under no pressure to merge with another bank as its shares plunged.
"Societe Generale is under no constraint to merge with another financial company," Lagarde told France 2 TV.
The trader blamed for the scandal, 31-year-old Jerome Kerviel, remained in custody after turning himself in on Saturday. He is helping an investigation into how he kept his supervisors in the dark while losses piled up, prosecutors said.
Kerviel's lawyer, Christian Charriere-Bournazel, said his client was expected to face preliminary charges yesterday.
But he told Europe-1 radio that he was "convinced"that Kerviel would not be kept in prison while the judicial probe continues.
He reiterated what the bank has said -- that Kerviel did not appear to have profited personally.
Charriere-Bournazel claimed that Kerviel had done well for the bank last year, making a profit of 1.5 billion euros (US$2.21 billion) with his trades by the end of the year.
"The expression `fraudster' is totally misplaced," the lawyer said, adding that Kerviel "didn't embezzle a single centime."
He said Kerviel had been doing a trader's job by taking on risk, and accused the bank of setting him up for a "lynching."
Societe Generale revised downward slightly the amount Kerviel allegedly lost -- from 4.9 billion euros to "just over" 4.82 billion euros.
Chief executive Daniel Bouton said the bank has not been approached by any suitor.
Bouton went to London yesterday to drum up support for the bank's 5.5 billion euro emergency share issue, which has already been underwritten by two US investment banks.
SocGen's shares tumbled yesterday after Citigroup said the French bank's franchise was "severely impaired." The shares fell by 9 percent in early trading.
Citigroup also speculated that British-based HSBC, which already has a big retail and commercial banking presence in France, might be interested in buying SocGen.
Lagarde's statement was the latest sign that France's establishment is rallying round to SocGen's defense in an attempt to stave off talk that a foreign rival might launch a takeover bid for the company as its market value sinks.
A top adviser to French President Nicolas Sarkozy warned on Sunday the government would probably intervene if raiders made a move.
"I don't think the state would remain with its arms crossed if someone, whoever the predator, tried to take advantage of the situation," Henri Guaino told French TV.
Meanwhile, about 100 Societe Generale shareholders have filed a suit for insider trading and manipulating share prices after the French bank revealed multibillion euro losses, a lawyer said yesterday.
The suit targets a member of the bank's supervisory board who sold shares worth 85.7 million euros (US$126 million) on Jan. 9 and "any other person who directly or indirectly profited from insider information," said lawyer Frederik-Karel Canoy.
The financial market regulator, the AMF, said the sale had been carried out by Robert Day, a member of the board since 2002, at a price of 95.27 euros per share.
It added that two foundations "linked" to Day, the Robert A. Day Foundation and the Kelly Day Foundation, had also sold shares on Jan. 10.
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