French bank Caisse d’Epargne, which has lost around 600 million euros (US810 million) in derivatives trading, was to hold a meeting yesterday to decide the fate of its management, sources said.
“There will be a vote of confidence on whether to keep management or not,” a source close to the bank said, adding that the supervisory board would meet at 3pm.
Another source said several members of the supervisory panel were determined to demand the departure of Charles Milhaud, the president of the group’s executive board. His mandate expires late next year.
The executive board also includes director general Nicolas Merindol, risk and finance head Julien Carmona, human resources chief Guy Cotret and development director Alain Lacroix.
French President Nicolas Sarkozy warned that bank chiefs must “bear the consequences” after Caisse d’Epargne revealed on Friday that it had lost more than half a billion euros in a derivatives trading “incident” the prior week.
The bank said it had sanctioned those responsible and notified regulators.
“A team of five or six people went beyond management orders,” a spokesman for Caisse d’Epargne said.
A financial director has been suspended, while the other employees involved are “not currently working,” he said.
The bank had decided in June to gradually shut down trading for its own account by February because the risks were considered too great. This process will now be speeded up and should be completed within days, the spokesman said.
The loss comes at a delicate moment for the banks and the government, which this week put in place a 360 billion euros rescue plan aimed at unblocking credit markets and ensuring the nation’s banks do not collapse.
It is part of an unprecedented weekend decision by the 15 nations sharing the euro currency to unblock frozen credit markets after last week’s tailspin on global stock exchanges.
The money includes 320 billion euros in guarantees for bonds and other loans that banks take out. If the banks make good on that debt, then the French government — and by extension, taxpayers — will not have to pay anything, officials say.
The other 40 billion euros will go to a government-backed agency to provide banks with extra capital. That part of the plan also allows the government to take stakes in troubled banks that get state capital.
Caisse d’Epargne and another French mutual bank, Banque Populaire, announced plans last week to merge. The tie-up would make the combined company one of France’s biggest banking groups, with a total of 480 billion euro in savings deposits and more than 6 million customers.
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