SocGen tightens controls after rogue trader case

By Yann Le Guernigou

PARIS (Reuters) - French bank Societe Generale (SOGN.PA: Quote, Profile, Research) is tightening its controls after a rogue-trading scandal that cost it 4.9 billion euros ($7.73 billion), but its chairman said on Wednesday banks remained vulnerable to fraud.

"Fraud has existed in the banking industry since its birth. There have been several fraud cases, and there will be others," Daniel Bouton told a parliamentary committee investigating the financial crisis that has engulfed the global banking sector.

Bouton said his bank, and others, were tightening control systems to include a more cross-asset, transversal overview instead of a system of limits on individual risks or traders.

On Jan. 24, SocGen unveiled the trading losses it blamed on unauthorised stock market deals carried out by Jerome Kerviel, a junior trader at the bank.

Bouton, who was speaking in his role as chairman of the French Banking Federation, also said he saw no reason for a credit squeeze in France and noted the situation for banks in general was improving.

"I am not among the optimists about the current situation in the credit markets and liquidity, but I am among the people who believe that we have started to see the situation improving," Bouton said.

He cited the takeover of Bear Stearns by JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) and the successful capital increase of UBS (UBSN.VX: Quote, Profile, Research) as steps that strengthened the banking sector.

Asked whether his own bank could become a takeover target, Bouton said: "Societe Generale is unique in the world in that it has withstood two takeover attempts ... There is nothing to say that there cannot be a third; it's part of the rules of the game."