Page last updated at 15:21 GMT, Friday, 17 October 2008 16:21 UK

French bank admits trading loss

French bank Caisse d'Epargne
Caisse d'Epargne is in the process of merging with Banque Populaire

French Finance Minister Christine Lagarde has called for a special audit of all French banks after Caisse d'Epargne admitted a big trading loss.

The mutual savings bank said it lost 600m euros ($807m; 466m) in a derivatives trading incident last week.

In a statement, the bank said that the losses would not threaten its financial viability or affect its customers.

It blamed the "extreme volatility" in the markets in the week of 6 October for the incident.

A Caisse d'Epargne spokesman said the loss was caused by a "small team", which had been sanctioned for exceeding its trading risk limit.

The bank said that it had sacked one of the assistants to finance director Julien Carmona.

Merger plans

Caisse d'Epargne said this latest incident would not affect its plans, announced on 8 October, to merge with another mutual bank, Banque Populaire.

The merger would create one of France's biggest banks with 480bn euros of deposits and more than six million customers.

The two banks together are the majority shareholders in the investment bank Natixis, which has been among the worst-hit in France by the US sub-prime mortgage crisis.

Seperately, rumours of a big derivatives loss forced Societe Generale and Dexia to issue denials earlier in the week.


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