Calls for Resignation

"Societe Generale is in a crisis situation," French Economy Minister Christine Lagarde told LCI television on Tuesday, Jan. 29. "In a difficult moment, the board members are there to decide if the person in charge is the best placed to run the ship when it is pitching, or whether they should change the captain."

French President Nicolas Sarkozy on Monday evening had explicitly called for the resignation of Societe Generale CEO Daniel Bouton.

"When you have a fat salary, no doubt entirely legitimate, and then a problem crops up, you cannot wash your hands of responsibility," the president said.

Bouton had submitted his resignation last week after the news became public Thursday that employee Jerome Kerviel had lost the bank 4.9 billion euros ($7.22 billion) in an unauthorized and highly speculative stock deal. However, the board rejected his resignation and asked him to stay on.

Rogue trader not charged with fraud

Kerviel, a 31-year-old junior trader at Societe General, was freed from jail late Monday, pending further investigation, after judges decided against charging him with fraud. He has been accused of forgery and using forged documents, computer abuse and breach of trust, which could lead to up to three years in prison and hefty fines if he is convicted.

Prosecutor said they would appeal Kerviel's release.

Public prosecutor Jean-Claude Marin told journalists Monday that Kerviel had admitted that his fictitious trading had begun in 2005 -- a year earlier than the bank's version -- but that the trader had said other employees were involved in the same types of deals.

"He wanted to be seen as an exceptional trader, an astute market player," said Marin, adding that Kerviel was attracted by the possibility of earning a 300,000-euro bonus.

The junior trader allegedly ran up positions worth 50 billion euros on futures tied to three European share indices but didn't protect them as he'd promised, instead leaving them exposed to high risk.

Take-over considered likely

The head of the investment department that employed Kerviel, Jean-Pierre Mustier, would have been Bouton's likely successor as chief executive officer. However, his standing has also been damaged by the scandal, posing the question of who will take over the bank.

Reeling from the US subprime crisis that shook up the global financial sector, Societe Generale's stock had dropped nearly 30 percent since the beginning of this year.

Kerviel's lawyers have accused the bank of using the rogue trading scandal as a "smokescreen" to cover up wider losses caused by the US crisis.

Experts have speculated that the bank may become the subject of a take-over, with France's biggest listed bank, BNP Paribas, named as a likely candidate. Societe Generale escaped a take-over bid by BNP Paribas in 1999.