Risky positions

19 September 2007

A rogue trader has wiped out twothirds of the French bank s investment arm’s quarterly earnings. It s time to tighten up procedures. But the big loss raises a bigger question whether Agricole waited too long before it decided to shake Calyon up last summer.

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Calyon, the investment banking division of France's Credit Agricole, on Tuesday said its profit in the 3d quarter would be impacted by a E250m loss due to an unauthorised position unveiled at the proprietarty trading desk of its New York subsidiary.

The bulk of the position, on diversified credit market indices, has "no relation whatsoever" to the subprime market, the bank said.

Calyon added that disciplinary measures had been taken regarding the individuals concerned. It also said that it has strengthened security controls at its trading desks.

The position was built up in the last days of August and senior management was made aware of it on September 4, Calyon said in its release.

Credit Agricole shares were up 2% in midday trading with shares of Societe Generale and BNP up 8% and 6%, respectively.

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