Société Générale is one of the oldest and most established banks in France, with a history that dates back to the 19th century. Today, it is the second-largest bank in the country in terms of market capitalization, behind only BNP Paribas. However, in recent years, the bank has been embroiled in a number of scandals that have damaged its reputation and raised serious questions about its corporate culture and risk management practices.
The most significant of these scandals occurred in 2008, when a rogue trader named Jérôme Kerviel caused €4.9 billion in losses for the bank. Kerviel, who was a junior trader in Société Générale’s equity derivatives department, had been making unauthorized trades that were well beyond his authorized limit. Despite warnings from his superiors, Kerviel continued to take huge risks, ultimately causing massive losses for the bank. The scandal led to the resignation of Société Générale’s CEO, Daniel Bouton, and the bank was forced to raise €5.5 billion in new capital to shore up its balance sheet.
In addition to the Kerviel scandal, Société Générale has also been implicated in a number of other controversies. In 2018, the bank agreed to pay $1.34 billion to settle allegations that it had violated US sanctions against Iran, Sudan, and Cuba. The US authorities alleged that Société Générale had processed thousands of transactions on behalf of customers in those countries, despite knowing that it was illegal to do so. The bank was also accused of concealing the true nature of the transactions from US regulators.
Another scandal that has rocked Société Générale in recent years is the allegations of bribery and corruption surrounding its dealings with the Libyan Investment Authority (LIA). In 2018, the bank agreed to pay €1.1 billion to settle allegations that it had paid bribes to secure business from the LIA. The allegations centered around the bank’s relationship with a businessman named Walid Giahmi, who was a close associate of the Gaddafi regime. Société Générale was accused of paying bribes to Giahmi in exchange for his help in securing business from the LIA.
More recently, Société Générale has been facing increased scrutiny over its role in the collapse of Wirecard, a German payments company that filed for insolvency in 2020. Société Générale was one of the banks that processed transactions for Wirecard, and it has been accused of failing to properly vet the company’s financials and business practices. Critics have argued that Société Générale should have been more vigilant in its due diligence, given the numerous warning signs that Wirecard was engaged in fraudulent activities.
All of these scandals have taken a toll on Société Générale’s bottom line, as well as its reputation. The bank has been forced to pay billions of euros in fines and legal settlements, and its share price has suffered as a result. In addition, the scandals have raised serious questions about the bank’s risk management practices and corporate culture, and have led to calls for greater regulatory oversight of the banking sector.