Sarkozy angry with Noyer for SocGen delay - source


  • World
  • Saturday, 26 Jan 2008

MYT 5:16:01 AM

PARIS (Reuters) - French President Nicolas Sarkozy is angry with Bank of France Governor Christian Noyer for not having informed the government earlier about the losses at Societe Generale, a source close to the matter said on Friday.

The source said Sarkozy's office and Economy Minister Christine Lagarde had been informed about the problems at around 8 a.m. on Wednesday morning. Prime Minister Francois Fillon said earlier on Friday he was also told on Wednesday.

France's President Nicolas Sarkozy delivers a speech at a Franco-Indian economic conference in New Delhi, January 25, 2008. Sarkozy is angry with Bank of France Governor Christian Noyer for not having informed the government earlier about the losses at Societe Generale, a source close to the matter said on Friday. (REUTERS/Philippe Wojazer)

"The fact that Mr Noyer did not inform the other French authorities was taken very badly by the government," the source said. "The president was not very happy, and he has let it be known at the Bank of France."

Noyer told a news conference on Thursday that he was informed of the problems by SocGen over the weekend "in real time" ahead of the official announcement on Thursday morning.

SocGen Chairman Daniel Bouton said in a letter to shareholders he had informed Noyer and France's financial markets regulator, the AMF, on Sunday, after discovering his bank had a problem late on Friday.

There have also been questions about whether Noyer informed the U.S. Federal Reserve of the problems ahead of its emergency, three-quarter-percent interest rate cut on Tuesday, and if not, why not.

The Fed has said it was unaware of the SocGen scandal that led to about $7 billion in losses at the bank, which dealers say helped depress European markets ahead of the Fed rate cut.

Noyer told reporters on Thursday he had informed the appropriate people in a timely way.

"On who was informed and when, all the necessary contacts were made at the opportune moment," he said.

European Central Bank President Jean-Claude Trichet said it was a national banking issues that fell under the responsibility national central bank.

"The explanations were given by Christian Noyer," Trichet said in an interview on LCI Television.

"In our system of European Central Bank and national central banks, the responsibility for banking surveillance is at the level of the Bank of France and the Bank of France has said what needed to be said."

Fillon said he was notified on Wednesday, but added that, given the importance of the case, "perhaps the government could have been informed earlier."

Noyer said it had been SocGen's decision, and not the Bank of France's, to unwind the fraudulent positions at the first opportunity after they were discovered on Friday evening.

"Because the market conditions were very bad, it was absolutely imperative to unwind the positions as quickly as possible to stabilise the situation," Noyer said.

France's CAC 40 stock index fell around 9 percent from its open on Monday to Wednesday's close, also stirring market talk that SocGen's decision to get out had helped exacerbate the falls on the market.

Fillon said he had directed the finance ministry to provide him with "the information on what happened within eight days."

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