Bouton wins backing from SocGen board

Daniel Bouton, head of Société Générale, on Wednesday survived public calls for his departure as the French bank’s board voted to reconfirm him as chairman to steer the bank through the crisis sparked by the banking industry’s biggest rogue trading scandal.

Mr Bouton was unanimously supported by the board, which fears his departure could destabilise the bank as it seeks to put in place a delicate €5.5bn ($8.1bn) rescue fund-raising, and perhaps make it vulnerable to a hostile bid. However, it was unclear whether he would survive in the longer term.

A crisis committee composed of independent directors – chaired by Jean-Martin Folz, former Peugeot boss – has also been created to ensure that the causes and full impact of the scandal have been fully identified. PriceWaterhouse Coopers has been appointed to conduct the independent investigation.

Christian Noyer, governor of the Banque de France, the central bank, told a hearing of the Senate finance committee in Paris that “all the normal controls within Société Générale do not appear to have functioned as they should have done.”

The scam – allegedly run by Jérôme Kerviel, a junior trader, for more than a year – has cost the bank €4.9bn in losses and has seriously damaged SocGen’s reputation.

President Nicolas Sarkozy this week suggested that Mr Bouton should take responsibility, and one director told the Financial Times that such comments could not be ignored by a French bank, even a private one.

But Mr Bouton has won support inside the bank to stay on to see the group through a delicate period. A few hundred employees demonstrated outside SocGen’s Paris headquarters in solidarity on Wednesday as the board meeting got under way, and the staff representative on the board has said Mr Bouton must stay.

Many fear that a hostile bid is imminent, although François Fillon, French prime minister, has said SocGen must remain a “great French bank”. A government minister, emerging from the weekly cabinet meeting on Wednesday, said there was “no risk” that it would be broken up.