Scorn for banking industry after SocGen scandal
Business leaders said they were aghast by the culture of banking and its excesses following revelations that a trader at French bank Societe Generale (SOGN.PA: Quote, Profile, Research) had lost $7 billion through possible fraud.
“It’s something that further damages the image of banking at a time when people are already very concerned about risks,” Intesa Sanpaolo (ISP.MI: Quote, Profile, Research) Chief Executive Corrado Passera told Reuters on the sidelines of the World Economic Forum.
SocGen revealed on Thursday a junior employee on its derivatives trading desk earning less than 100,000 euros a year had confessed to carrying out a sophisticated fraud, triggering 4.9 billion euros ($7.18 billion) in losses as his trades were cancelled in volatile markets.
On the crowded sidelines of the annual meeting of the World Economic Forum in snowy Davos, the news was met with incredulity and then scorn.
“I’ve got 200,000 employees working every day, many of them in factories, doing an honest job no fax payday loan. What I do is about bricks and mortar,” said a senior executive at one of the world’s largest companies, who spoke on the condition of anonymity.
“But when I look at these bankers, I have to say that I’m a bit ashamed for them. There needs to be a little bit more common sense.”
Mexican central bank governor Guillermo Ortiz said regulators should not rush to impose new, heavy-handed rules but added the scandal headlines and the U.S. subprime mortgage crisis risked damaging trust in the financial system.
“The worst thing is the damage to confidence,” he told Reuters.