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Two Société Générale traders in Hong Kong left the group last year after the French bank discovered unauthorised derivatives trades that could have lost it money in a severe market downturn.
SocGen confirmed on Tuesday that there had been an “incident” in 2023 that had ultimately been caught by its compliance systems. The trades had taken some time to detect, a person familiar with the details said.
The bank said it had identified “a one-off trading incident in 2023, which didn’t generate any impact and led to appropriate mending measures”.
A rogue trading scandal resulted in a €4.9bn loss for the bank in 2008 on huge unauthorised positions taken by trader Jérôme Kerviel.
SocGen has since been through various restructurings and has tightened its risk management, including under new chief executive Slawomir Krupa, who was appointed almost a year ago and previously ran the investment bank.
The person who made the trades in Hong Kong had not exceeded authorised trading amounts, but had placed bets on options contracts linked to Indian stock market indices that they had not been authorised to carry out, the person familiar with the details said.
Stress testing performed after the transactions had been discovered found that if Indian markets had collapsed in a short space of time, SocGen could have been exposed to losses, the person added. No losses were ultimately made on the trades.
Bloomberg first reported the trades and departures.
After the Kerviel scandal and the global financial crisis, SocGen, France’s third-biggest listed bank, underwent several restructurings under previous chief executive Frédéric Oudéa, and cut some of its riskier activities.
Krupa is hoping to boost SocGen’s share price with more reforms that aim to cut some non-core and less profitable activities. Krupa has presented his plan as a “realistic” strategy that will mean lower profitability and slower growth in the medium-term than previously forecast.
Investors were downbeat when that outlook was first presented in September 2023. SocGen shares have not fully recovered since a near 13 per cent fall on the day of the strategy update, but are up just over 6 per cent this year. The bank is due to report first-quarter results on Friday.
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