Societe Generale SA, France’s second-largest bank by market value, said unauthorised trading and subprime-related writedowns led to a record 3.35 billion-euro ($4.9 billion) fourth-quarter loss.
The net loss compares with profit of 1.18 billion euros in the final quarter of 2006. For full year, Societe Generale’s net income fell to 947 million euros from 5.22 billion euros, Paris-based bank said in a statement on Thursday, matching preliminary results announced on February 11.

Unauthorised bets

Societe Generale blames the reversal mostly on unauthorised bets by 31-year-old Jerome Kerviel, whose positions led to 4.9 billion euros of trading losses. A report from three independent board members said management failed to follow up on 75 warnings over more than two years about Kerviel’s trading, adding to questions about oversight at the 144-year-old bank run by Chairman Daniel Bouton. The trading losses, along with 2.05 billion euros of writedowns and provisions linked to US subprime mortgage crash, forced Societe Generale to raise 5.5 billion euros from shareholders this month to replenish capital. For all of 2007, Societe Generale’s writedowns and provisions linked to subprime mortgages and bond insurers amounted to 2.57 billion euros.

Societe Generale’s French retail banking network earned 315 million euros in the quarter, compared with 318 million euros in the year-earlier period. Earnings from overseas consumer banking rose 53 per cent to 202 million euros, as the company expanded in Eastern Europe and North Africa.

The bank “intends to use substantial generation of capital by its two core businesses, the French networks and corporate and investment banking, to pursue expansion in its businesses and its markets,” bank said.