NEWS | Wednesday, 12 March 2008

Societe Generale in successful share issue

Societe Generale has said that its plan to raise 5.5bn euros ($8.5bn; £4.2bn) by selling reduced-price shares to existing investors has been a success.
Shares were priced at a 40% discount of 47.50 euros each, and the French firm said investors applied for almost twice the number that were on offer.
Analysts say the bank has now solved its short term capital problem after a trading scandal cost it 4.9bn euros.
But there are still doubts over its long-term prospects.
“The success of this operation will allow Societe Generale to continue its development in business and regions with high potential,” Societe said in a statement.
After the announcement the bank’s shares were ahead by 1 euro, or 1.7%, at 65.2 euros.
Many analysts believed that high demand for the rights issue shares stemmed from speculation that bigger French rival BNP Paribas is considering a bid for scandal-hit Societe.
“If there’s a deal, it ought to take place in the forthcoming days,” said Stratege Finance fund manager Valerie Cazaban. “Otherwise, the stock will lose its speculative value,” she said.
Societe blames former employee Jerome Kerviel for the rogue trades that blew a massive hole in the bank’s accounts, leaving it vulnerable to a takeover approach.
Kerviel is in custody while the case is being investigated.
He is accused of breach of trust, falsifying documents and breaching computer security. Kerviel has said he refuses to be “a scapegoat”.