Societe Generale Scandal

"The backroom boy turned 'vanilla' futures trader who lost 4.9 billion euros ($7.2 billion) for SocGen shows just how easy it is to dupe" sophisticated systems of checks and balances, wrote London's Financial Times on Thursday, Jan. 24, in its online edition. "At one level the abuse at SocGen is another example of a European bank trying to emulate Wall Street's finest, but coming unstuck because of a failure in risk control.

"But it is also true that as long as human nature remains what it is -- and dealers are rewarded for making profits and fired for failure -- then deception will always be a risk," continued the paper.

The case could "yet prove terminal" for Societe Generale, concluded the Financial Times and "a take-over attempt by one or more of its rivals must be a possibility."

French financial publication Les Echos on Thursday agreed that a buy-out was likely. "It's become booty in a banking landscape that has been shaken up by the unfortunate American mortgage crisis and put back in order," the paper commented. "If its long-time competitor BNP Paribas doesn't snap at the chance, another large European bank could -- like UniCredit in Italy, for example."

In the US, a bank would have to replace its president in a similar situation, opined the paper, but the consequence for Societe Generale is likely to be a "loss of independence."

Writing from Munich on Thursday, the Süddeutsche Zeitung predicted that the French bank would survive the crisis, as "the government won't allow it to collapse.

"Apparently investors attribute the losses to the criminal behavior of an individual and don't see a connection to the credit crisis," wrote the German paper. Nevertheless, "the case has further undermined trust in the financial branch, without which it cannot fulfill its important role in the economy."

Although fraud cannot be rule out, banks and controllers should be responsible for "keeping the risks as small as possible," concluded the paper.

Paris' Le Figaro in its Thursday edition agreed that "bankers are urgently called upon to stringently and uncompromisingly build up their control systems for risky businesses" and that the "stock exchange supervisory should adjust their tools to meet the requirements of the modern financial world.

"This unbelievable affair adds to the mistrust that has ruined the reputation of the financial world since the beginning of the US mortgage crisis," the French paper concluded.