French government to look into bank’s $804-mn loss

October 17th, 2008 - 8:22 pm ICT by IANS  

Paris, Oct 17 (DPA) French Finance Minister Christine Lagarde has asked the government’s bank oversight authority to look into the country’s second-largest banking group, Caisse d’Epargne, after it announced a loss of 600 million euros ($804 million) in a derivatives trade, French radio reported Friday.The loss, which the bank described as a “market incident”, occurred during the first week of October, when the Paris Bourse’s CAC 40 index lost 22 percent of its value.

The Caisse d’Epargne, which controls some 358 billion euros in savings deposits, said Friday in a statement that the loss was caused by “the extreme volatility of the markets and the stock market crash of the week of Oct 6″.

However, France Info reported that the trade that led to the loss was unauthorised, and that the head of the team of traders that carried it out was fired and the team itself disbanded.

“Considering the amount of its own capital - more than 20 billion euros - and its significant liquidity, this loss will not affect the group’s financial stability and will have no consequences for its clients,” the bank said.

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