Société Générale’s Daniel Bouton to step down

Source: Exec Digital UK

Date :18/04/2008 10:20:09

Societe Generale, the French bank that was rocked by a €4.9 billion rogue trading scandal, said late Thursday that Daniel Bouton would step aside as chief executive officer.

Mr. Bouton who will remain as nonexecutive chairman will be replaced by Frédéric Oudéa, the chief financial officer. He joined the bank’s senior management team last month as deputy chief executive.

Philippe Citerne, Mr. Bouton's second in command, will also step down from the bank's board when his mandate finishes at the end of May.

Management pressure

The announcement follows a reorganization of the bank’s senior management structure.

The bank has faced pressure from French politicians for Société Générale's senior management to take responsibility for the nearly €5 billion in losses suffered after the bank closed out on €50 billion in unauthorized bets made by junior derivatives trader, Jérôme Kerviel.

"This should have happened much sooner," said Frédérik-Karel Canoy, a lawyer representing hundreds of small shareholders in Société Générale.

"Delaying it has, rather than restore confidence, has increased the distrust" in the bank's management.

Resignation

Mr. Bouton and Mr. Citerne offered their resignations to the board in late January, shortly after the trading scandal - the biggest alleged bank trading fraud in history - was disclosed however Société Générale's board rejected the offers.

However, pressure for him to step down has remained. The French president, Nicolas Sarkozy, has been one of Mr. Bouton's most vocal critics, saying that he was baffled by the board's loyalty to its chief.

"When the president of a company experiences a disaster of this magnitude and he doesn't face any consequences, it's not normal," Mr. Sarkozy said in February.

While Mr. Bouton’s supporters argue that he saw out the worst of the storm, the failure to stop Mr. Kerviel earlier has tarnished Mr Bouton’s reputation and ultimately cost him the post of chief executive.

The changes will take effect on May 12, when the board will sign off on the first-quarter results.

April 18, 2008