French Bank Fraud Unfurls

By Alasdair Sandford BBC News, Paris

The bank said the trader had confessed to the fraud

The rumours had been swelling in France for several days - something was wrong with Societe Generale's accounts.

But when the news was confirmed, the staggering size of the losses took a while to sink in. Read original article.

There was little to indicate that this was potentially one of the biggest ever financial scandals.

A major rolling news radio station ran the story throughout the morning as its second item.

'Go down with the ship'

I've been a client for 28 years - I will not change banks - I don't have a lot of money so I'm not that concerned Elvira, Societe Generale customer

"Stop taking us for idiots", wrote one, incredulous that a lone trader could "lose" five billion euros without anyone knowing.

Several were angry that Societe Generale's bosses had not resigned.

The captain used to go down with his ship, said another, "yet today the head of a bank responsible for colossal losses remains in place... Poor France!"

The scandal has caused shockwaves in the banking world but ordinary people seem to be taking the news in their stride.

Customers outside one branch of Societe Generale in central Paris did not believe the scandal would affect them personally.

One woman, Elvira, 64, said: "I've been a client for 28 years. I will not change banks. I don't have a lot of money so I'm not that concerned."

'No accomplices'

Another customer, Jean, 26 years old, said he was more concerned by the fallout from the US subprime crisis.

"I can't see how one single trader can pull this off, there are supposed to be different security levels. It is worrying that this can happen. But I didn't lose confidence as I didn't have any confidence before," he said.

Financial experts in France have also asked how Jerome Kerviel could, as he is alleged to have done, bypass the bank's security systems designed to prevent such disasters from happening.

France's Finance Minister Christine Lagarde has asked the country's Banking Commission to propose new controls to prevent fraud-related losses.

Questions have been raised over whether the trader was really acting alone, as the bank has claimed.

But one man who has questioned Jerome Kerviel remains convinced that was the case.

Jean-Pierre Mustier, the head of Societe Generale's investment bank, SGCIB, said: "Bearing in mind the methods used, it seems impossible that he acted with accomplices."

Website of the Week

The Institute of Export・s mission is to enhance the export performance of the United Kingdom by setting and raising professional standards in international trade management and export practice. This is achieved principally by the provision of education and training programmes.

Hat tip to Cassons

The UK: A Springboard for Global Growth

British Swiss Chamber of Commerce
Luncheon in Zurich
Wednesday 23rd January 2008
Zunfthaus zur Meisen, Münsterhof 20, 8001 Zurich
12.00 Aperitifs, 12.30 Luncheon


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Guest of honour and speaker will be:

Digby, Lord Jones of Birmingham, KT
Minister of State for Trade and Investment

“The UK: A Springboard for Global Growth"

Kindly sponsored by BA and Scottish Development International

Digby, Lord Jones of Birmingham was appointed Minister for Trade and Investment at the Department for Business, Enterprise & Regulatory Reform on 29 June 2007. He served as Director-General of the Confederation of British Industry (CBI), the UK’s ‘Voice of Business’, from 2000 to 2006, where he regularly visited businesses in the UK and worldwide – taking their views back to those who make the rules.

After some time in the Royal Navy he joined Birmingham law firm Edge and Ellison in 1978, making Partner in 1984, Deputy Joint Partner in 1990 and Senior Partner in 1995. He was involved in most of the MBO and M&A activity in the West Midlands in the late 1980s and early 1990s. In 1998 Digby joined KPMG as Vice Chairman of Corporate Finance, acting as close adviser to many public companies across the United Kingdom and in KPMG’s global markets.

Digby is a Corporate Ambassador for the Cancer Research UK Corporate Ambassadors. He is also a Fellow of UNICEF. He is President of the Diversity Works initiative - a programme led by the disability organisation Scope, a Diamond Ambassador for Mencap’s WorkRight initiative, designed to spread the message of equality for disabled people, a Vice-President of Birmingham Hospice, and a Patron of Lifecycle UK.

Walk2Web

If you would like to see who's linking to your site and vice versa - Walk2Web is amazing. Dont forget to click on the play button (bottom left) and make sure you have your speakers turned on.

Thanks to Barry Sampson of Learn Me Happy, I hadn't really appreciated the power of Walk to Web until I read his blog post.

If you are a blogger and you haven't yet seen this tool in action, it is really worth a look.

Website of the Week

eLearning Network

The aim of the eLearning Network is to provide leadership in the application of technologies to learning. Established in 1988, the eLearning Network is a non-profit making organisation, providing the means to share industry best practice.

Hat tip to Cassons

Looking at the Markets in 2008: A view from Canary Wharf. Blue sky or grey clouds ahead?

British Swiss Chamber of Commerce luncheon at the Hôtel Beau Rivage in Geneva addressed by Mr Henk Potts, Equity Strategist, Barclays Wealth Management,

Who can tell whether 2008 will be the beginning of the end or the end of the beginning of the uncertainties in the world’s financial markets? Well, one person who is better informed than most is our guest speaker, Henk Potts.

Will economic uncertainties continue throughout the New Year? Is the widening effect of the sub-prime crisis in the U.S. due to “snooty bankers and financiers” unable to cope with the complexities of the products in which they were investing, as someone said recently? Or are the markets merely responding to a Newtonian principle?

With growing inflation in the Eurozone, a looming economic slowdown and flat consumer spending in the U.S., plus the seemingly unstoppable acceleration of India’s and China’s globalized economies, how nervous – or optimistic - should we all be feeling as we start the year of the Beijing Olympics? There could not be a better complement to a start-of-year business lunch menu in Geneva than enjoying the bonhomie of the BSCC generously served up with the astute analysis and relaxed wit of our guest speaker from Canary Wharf.



Kindly sponsored by Barclays Bank (Suisse) SA, Coutts Bank von Ernst Ltd, Lloyds TSB Bank Plc, PricewaterhouseCoopers AG and Withers LLP

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Emerging-market multinationals

A new breed of multinational company has emerged

WHEN Ford Motor Company bought Jaguar in 1989 and Land Rover 11 years later, it marked a low point for Britain's ailing industrial heritage. Last year Ford concluded that it could not make money from the illustrious British marques. The two firms shortlisted to take the prize come from India. Their ambition and confidence is a sign of something new in global business: the arrival in force of emerging-market multinationals.

Tata Motors, the carmaking bit of Tata Group, India's biggest industrial conglomerate, has edged ahead of Mahindra & Mahindra, a sprawling group that makes tractors and off-road vehicles, to become the preferred bidder. Ford told Jaguar workers this month that it was “in substantive discussions” with Tata. The future of these two grand old badges will be shaped not in Coventry, cradle of the British motor industry, but in Pune, home of Tata Motors.

Another indication of this newcomer's growing strength was the unveiling this week of the revolutionary, cheap “one lakh” car, which will sell in India and South-East Asia for the equivalent of $2,500. Thus the Indian company, which launched its first saloon car barely ten years ago, is beating the industry's established giants in a new market segment in which sales will surely grow fast.

Tata is certainly not the only company from an emerging economy striding onto the global stage. A study by Boston Consulting Group (BCG) found 100 companies from emerging markets with total assets in 2006 of $520 billion, more than the world's top 20 car companies. By 2004 the UN Conference on Trade and Development (UNCTAD) even noted that five companies from emerging Asia had made it into the list of the world's 100 biggest multinationals measured by overseas assets; ten more emerging-economy firms made it into the top 200.

By 2006 foreign direct investment (including mergers and acquisitions) from developing economies had reached $174 billion, 14% of the world's total, giving such countries a 13% share (worth $1.6 trillion) of the stock of global FDI. In 1990 emerging economies accounted for just 5% of the flow (see chart 1) and 8% of the stock. Their slice of global cross-border M&A has been climbing. It reached 14% in value terms in 2006 (chart 2). That year they spent $123 billion in more than 1,000 cross-border deals.

Since UNCTAD's first analysis in the early 1970s there has been concern about the power wielded by companies from rich countries in poorer ones. Developed countries have had their bouts of anxiety too. In the 1960s the French fretted about le défi américain, as IBM, Ford, General Motors, Dow Chemical and ITT spread their tentacles across Europe; in the 1980s it was America's turn to squirm as Japanese firms bought up Hollywood and Manhattan.

The latest trend reflects a new, fundamental shift. In a more open world, emerging economies are spawning their own giants. UNCTAD is turning its attention to the new shape of global business: investment now flows increasingly from south to north and south to south, as emerging economies invest both in the rich world and in less developed countries. More...

CFO in focus - Staying alive

“Down but Not Out”

By Vincent Ryan

Humbled by the credit crunch, private-equity firms are not the hard-charging dealmakers they once were. Still, they will continue to play an important role in the finance world in 2008 and beyond, with private equity remaining a force for companies looking to buy, sell or attract capital. “Most experts see private equity's current condition as a cyclical, and temporary, adjustment.”

Two case studies offer a glimpse into how private equity might operate if the crunch persists. One describes an agreement between Sun Microsystems and KKR, a private-equity firm, which opened up new opportunities for Sun, providing “an acid test of our vision, strategy and execution plans,” according to its finance chief. The other describes Sun Capital's (no relation) takeover of Friendly Ice Cream Corporation, which involved the private-equity group shouldering more risk than usual and financing the purchase in part by a sale-leaseback of Friendly's property assets.Read more...

CFO in focus - Location, location, location...

A look at recent articles from CFO, an Economist Group series of magazines for senior finance executives

“A Tale of Six Cities”

By Alix Stuart

December's cover story for CFO magazine is a thorough study of six cities across America at a time when companies are taking real-estate issues increasingly into account when making expansion or operational decisions. The perks and incentives offered to corporate tenants in three established financial centres—New York, Chicago and San Francisco—and three up-and-coming cities—Charlotte, Austin and Las Vegas—are explored.

A host of executives go on record to advise on the benefits and drawbacks of the cities they’ve chosen. As such, this is a useful primer for executives considering a move, especially as “the advantage is likely to swing back to the tenant side, if only slightly, as new construction reaches the final stages in many big cities and private-equity owners face the prospect of leasing (or selling) at a discount if they can't refinance short-term loans.” A useful checklist for dealing with landlords is included. More...