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Jérôme Kerviel, the rogue trader that saddled French bank Société Générale with a €4.9bn (US$6.7bn) loss in 2008 was sentenced by a Paris court today. He received a five-year prison sentence (two years suspended) and, to make his former employer whole, he was ordered to repay SocGen no less than four-billion-and-nine-hundred-million euros. His current monthly salary as a technology consultant is around €2,300. An appeal is pending.

To put the size of the fine in context, here are some rough equivalents:

  • The nominal annual GDP of the Bahamas (at purchasing power parity), according to the EIU’s 2010 forecast
  • Twenty Airbus A380 “super jumbo” planes
  • The net worth of the world’s 107th-richest person, British retail tycoon Sir Philip Green
  • The market capitalisation of semiconductor company STMicroelectronics
  • On Mr Kerviel’s salary while at SocGen, it would take him 49,000 years to earn enough to pay the fine. At his current salary, 178,000 years. At the French minimum wage, 304,000 years

Earlier today, the agency auditing America’s bank bailout funds—or the Office of the Special Inspector General for the Troubled Asset Relief Program, if you prefer—published a report about AIG. Specifically, the agency details the efforts of the New York Federal Reserve to negotiate with banks on the other sides of AIG’s ill-fated trades in the credit default swap market.

As the agency describes it, up to US$30bn was authorised in November 2008 to purchase the rapidly souring collateralised debt obligations on which AIG’s trades were based. In the end, US$27.1bn was paid to AIG’s counterparties for the assets. They were also allowed to keep US$35bn in collateral that AIG posted before the government-funded vehicle bought out the contracts.

“Questions have been raised,” the report notes, about whether the deal constituted a “backdoor bailout” of banks that did business with AIG. This remains a contentious issue because the government—as described in great detail in the report—was unable to force “haircuts” on the price of the assets acquired and, even worse, because the majority of beneficiaries from the deal were foreign. (It also didn’t help that the largest domestic recipient was Goldman Sachs.)

Although the sums have been reported before, seeing Société Générale at the top of the list of banks to rake in funds funnelled “inexorably and directly” from US government coffers—quelle horreur!—is reigniting criticism of Timothy Geithner, president of the New York Fed during the AIG affair and now US treasury secretary.

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The latest results from BNP Paribas prove that good things come to those who wait.

The bank, France’s largest, sat out the bout of mega-deals that marked the peak of the bubble—namely, the takeover of ABN Amro by a consortium of RBS, Fortis and Santander. Although Santander escaped relatively unscathed from the ill-fated deal, the takeover marked the beginning of the end for RBS and Fortis, both of which are in various stages of being carved up by regulators. BNP Paribas snapped up pieces of Fortis earlier this year. In its first full quarter under the French bank’s umbrella, Fortis accounted for around 21% of revenues and 24% of BNP Paribas’s third-quarter profits.

Meanwhile, Société Générale reported a doubling of net profit in its third-quarter results. With growing clout in investment banking and solid retail franchises, French banks are well positioned to take on a more prominent role in the regional financial scene in the years ahead.

Read more at Financial Services Briefing: “Vive la différence” (November 9th)

French banks 11-13-09