Wednesday, January 23, 2008

Societe Generale reports $7.1 bln trading loss from "fraud"

ice internal risk management...... In the end this is probably good news. ( You know that times are really bad when an € 5.5 billion capital infusion at fire sale prices is been widely seen as good news.....) There were rumors crashing the stock and the entire sector that they would have a big write down. But this write down seems (at least that´s what i hope) to be company specific. And some still wonder why banks don´t trust each other.......Probably the most important part is that SocGen is starting to write down some insurance from monolines and from a total of € 550 mio and only € 50 mio is coming from ACA! ( watch page 10 on the presentation )

Nette Risikokontrolle..... Unterm Strich dürfte das aber trotzdem für eine große Erleichterung sorgen ( Der Umstand das eine massive Kaitalspritze von üver 5,5 Mrd € zu Ausverkaufspreisen als gute Nachricht angesehen wird sagt eigentlch schon alles aus...). Speziell in den letzten beiden Tagen hat das Gerücht um eine riesige Abschreibung den ganzen Sektor zerlegt. Das die Abschreibung jetzt größtenteils nur auf einen "Betrug" und damit hoffentlich nur isoliert zu betrachten ist sollte beruhigen. Relativ gesehen natürlich....Kein Wunder das die Banken sich gegenseitig nicht über den Weg trauen..... Ein interessanterter Aspekt ist das auch SocGen damit angefangen ist wertlose Versicherung der Monolines abzuschreiben ( von den 550 Mio stammen lediglich 50 Mio von ACA / Details auf Seite 10 der Präsentation) . Passend zum Thema hier ein Ranking vom Spiegel über die größten Fehlspekulanten Börsenschwindler, Seiltänzer, Hochstapler

You cannot make this up. FT Alphaville is reporting that Societe General has won the award for the " Best Equity Derivatives House" .....

Das ist wirklich kaum zu toppen. FT Alphaville berichtet das ausgerechnet Societe General den Preis fpr das "Beste Derivatehaus für Aktien" gewonnen hat.

“We managed the existing book very well because we decided some time before the crisis to be long volatility and be less sensitive to correlation, so the losses were minimal. We suffered on our statistical arbitrage trading activity, but that was just for one month, and minimal compared to some hedge funds or other banks. Overall, our trading activities will be approximately flat compared to last year, which is a good performance,”

Qutote: Christophe Mianne, SG CIB’s head of market activities, covering equity, derivatives, fixed income, currency and commodities in Paris

Make sure you read the Societe General Presentation for some more interesting details !

Empfehle die Societe General Präsentation für die mehr als interessanten Details zu lesen !

Live blogging the SocGen conference call via FT Alphaville

French bank Societe Generale loss after an "exceptional fraud" committed by someone who usually trades plain-vanilla and European stock index futures.

It also said it was taking a 2.05 billion euro write-down, with 1.1 billion euros coming from U.S. residential property, 550 million euros coming from the U.S. bond insurers and 400 million euros in additional subprime-related risks. It will earn between 600 million and 800 million euros for the year.

The board rejected the resignation of CEO Daniel Bouton. It's going to issue 5.5 billion euros in preferred securities to J.P. Morgan and Morgan Stanley to boost its capital

The story is reminding of
Nick Leeson & Barings

Erinnert mich irgendwie stark an
Nick Leeson & Barings

Here is a good take from Barry Ritholtz Fed's Folly: Fooled by Flawed Futures? suggesting ( i think correctly ) that this poor trader has lead to the emergency cut

Hier eine wie ich finde zutrefende Einschätzung von Barry Ritholtz Fed's Folly: Fooled by Flawed Futures? der unterstellt das dieser durchgeknallte Trader es geschafft hat Bernanke zum größten Notzinsschritt seit Jahrzehnten zu bewegengrößten Notzinsschritt

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Anonymous eh said...

It's going to issue 5.5 billion euros in preferred securities to J.P. Morgan and Morgan Stanley to boost its capital

Is that so. Well, OK -- I guess everything is just fine then. Hopefully JMP and MS will do a little 'due diligence' on this; these writedowns have a way of growing over time.

1:12 AM  
Anonymous eh said...

A bit more from Financial Ninja:

We will retest the recent lows and most likely PLOW right through them.

I am starting to wonder if a taxpayer bailout of the bond insurers ('monolines') will be the ultimate outcome of any "stimulus" package. I think it was Fitch's downgrade of Ambac last Friday that caused the selloff in Asia on Monday. I think there is no way to find enough capital for ABK to meet its insurance obligations; the talk of having their own counterparties -- e.g. banks whose bonds ABK (supposedly) insures -- provide this money is just crazy nonsense. And it is clear that writedowns and losses triggered by more downgrades -- and worse a failure -- of bond insurers would be catastrophic. So the only thing that makes sense is for taxpayers to assume those obligations. As unthinkable as that would be in normal times, it will be clearly seen as the lesser of two evils.

If that happens, we have definitely seen the bottom.

1:47 AM  
Blogger jmf said...

Moin Eh,

still puzzled why Morgan & JPM are able to provide the capital....Have to wait for more details.

Nice to see how the capitalists are moving to hardcore communists when its in their favour ....

Lets see how long this attempt can avoid a further slump and whats next..... and what "innovation" comes next .....

The past few days were nice for traders and i must and gave investors a nice entry point on lots of solid stocks that also got washed out...

Interesting action in the last hour in Hong Kong!!!!!!!!

2:15 AM  
Anonymous Anonymous said...

Morgan & JPM counterparties? Other /same side of positions?

5:53 AM  
Anonymous Barley said...

Two Questions:
1. Did the rouge trader get his bonus and what is the name of his/her new Hedge Fund?
2. Taxpayers have no idea that they may well be paying for this credit bubble for years to come. 50B for N.Rock in the UK and now how many billion for the monolines that US public pay to cover risk for say a French Bank?

7:37 AM  
Blogger jmf said...


after all what i´ve seen lately from the Fed i am more convinced than ever that the Greenback will slump and will become the new carry trade currency for years to come.

This quote via Barry sums it up

"And, having been rewarded for their past tantrums, the market will now be screaming for another 75 bps next week. As Rick Santelli appropriately observed, the Pavlonian training is now complete."

Got gold....

8:07 AM  
Anonymous BR said...

Barry Ritholtz's comments were completely ill informed , yet par for the course from his Tin-Foil Hat conspiracy led blog

12:29 PM  
Anonymous Anonymous said...

Hmmm... this is probably the kind of thing to leave off your resume when applying for a job.
Mommy, why did Daddy lose his job?

2:56 PM  
Blogger jmf said...

" this is probably the kind of thing to leave off your resume when applying for a job.
Mommy, why did Daddy lose his job?"


There is still hope....

Several of the impoded Amarath traders are already back in business ....

9:27 PM  

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